The hope of the whole village, NVIDIA's earnings report is coming!
Dubbed as "the most important stock on Earth"—$NVIDIA(NVDA.US) will announce its Q1 FY2025 earnings after the U.S. market closes on May 22, Eastern Time.
This year, NVIDIA's stock price surge continues, with a year-to-date increase of up to 90%. However, since late March, NVIDIA's stock price has been fluctuating between $850 and $950, raising investor concerns that if the earnings merely meet expectations, it could lead to a stock price decline.
The market widely expects NVIDIA to achieve Q1 revenue of $24.487 billion, a year-over-year increase of 240.47%, and earnings per share of $5.18, up 532.28% YoY. This would mark the company's fourth consecutive quarter of record revenue and profits.
According to Bloomberg consensus estimates, NVIDIA's most critical business—data centers—is expected to generate revenue of $20.967 billion, up 389.43% YoY. This implies the segment's share of company revenue could expand further to 85%, up from 83% last quarter.
What do Wall Street giants think?
As NVIDIA's earnings approach, Wall Street firms are raising their price targets one after another.
· Goldman Sachs: AI spending will remain high, valuation still cheap, raises target price from $1000 to $1100
Since most big tech giants reported positive earnings this quarter, with healthy profit growth driven by demand for AI tools boosting cloud services sales, significant spending on AI infrastructure continues to be observed.
Among NVIDIA's largest customers, Meta Platforms, Microsoft, Amazon, and Alphabet all indicated that this year's capital expenditures will either maintain current levels or increase.
Goldman Sachs estimates that these four tech companies—Microsoft, Google, Amazon AWS, and Meta—will invest up to $177 billion in cloud computing this year, far exceeding last year's $119 billion, with further growth to $195 billion expected in 2025.
Goldman believes these investments will fuel NVIDIA's sustained revenue and profit growth, especially with its next-generation Blackwell AI chips set for release later this year.
Goldman Sachs argues that AI remains NVIDIA's primary growth driver and expects Q2 and Q3 data center performance to benefit from strong demand for AI-related computing and networking. Momentum from the AI ecosystem and product launches (e.g., H200 and Spectrum-X) also supports this outlook. The bank forecasts Q2, Q3, and Q4 data center revenue growth of 10%, 17%, and 5% quarter-over-quarter, respectively.
· Wells Fargo: Core business revenue to grow 380%, raises target price to $1150
Wells Fargo projects NVIDIA's Q1 data center revenue to reach $20.6 billion, up 380% YoY. The bank notes that the AI industry's continued boom, coupled with shortened H100 GPU delivery times (~10 weeks) and initial H200 shipments, signals sustained high growth for the company.
· KeyBanc: Earnings and guidance to exceed expectations, raises target price to $1150
KeyBanc states that despite the anticipated launch of Blackwell GPUs in H2, limited signs of demand pause suggest NVIDIA will report significantly better-than-expected Q1 earnings and Q2 guidance.
The bank estimates Q1 revenue of $24.47 billion and EPS of $5.56, adding that Blackwell chips (slated for H2 release) could help data center revenue surpass $200 billion long-term.
· HSBC: NVIDIA's AI business prospects underestimated, raises target to $1350
HSBC asserts that NVIDIA will continue demonstrating strong pricing power via its NVL36/NVL72 server systems and GB200 processor platform. Despite the stock's rally, it expects Wall Street to be stunned by the company's performance over the next year.
The bank forecasts Q1 revenue of $26 billion, above company guidance and consensus, and Q2 revenue of $28 billion versus $26.48 billion expected. By FY2026, it sees "significant upside" to profits, claiming current estimates are too low, and raises EPS outlook to $45.16 (45% above consensus $31.05) and revenue to $196 billion (42% above $138 billion).
How has the stock performed on past earnings days?
Per Market Chameleon, over the last 12 quarters, NVIDIA rose on earnings day 67% of the time, with an average move of ±7.4%, max gain +24.4%, and max loss -7.6%.
Currently, NVIDIA's implied move is ±9.6%, suggesting options traders bet on a 9.6% post-earnings swing; its average move over the past four quarters was ±10.8%, indicating options are undervalued.
Volatility skew shows slight bearish sentiment.
On May 22 (Wednesday), $PDD(PDD.US) will release Q1 2024 earnings. Year-to-date, PDD's stock has been volatile, down 2% as of May 16 close at $143.38.
For Q1, consensus expects revenue of ¥76.56 billion (+103.42% YoY) and EPS of ¥10.41 (+87.61% YoY). 12 analysts average a $182.78 target (~27.5% upside).
Last quarter, PDD smashed expectations with revenue doubling to ¥88.88 billion and operating profit up 146% YoY. West Securities notes cross-border e-commerce (led by exports) keeps growing.
For Q1, Bloomberg expects online marketing revenue up 38%+ YoY and transaction services up 267%, though both may decline sequentially (-22.7% and -5%).
All eyes are on Temu's growth: Sensor Tower reports Q1 MAUs surged 614% YoY to 167 million, with U.S. MAUs up 134% to 50.4 million.
As Alibaba, PDD, JD.com, and ByteDance escalate cross-border competition, China's cross-border e-commerce share of trade rose from 1% in 2015 to 5% in 2022.
West Securities highlights global e-commerce penetration growth, supply chain advantages, and policy tailwinds driving expansion. Temu's downloads and 48-country footprint support GMV doubling to $30 billion next phase.
Great Wall Securities notes overseas e-commerce penetration remains low; Temu's supply chain and Alpha advantages could replicate PDD's domestic success, forecasting rapid GMV/revenue growth and narrowing losses.
Reports suggest Temu is shifting focus beyond the U.S. (2023: 60% sales; 2024: <⅓) amid policy risks.
Bullish bets pile up! Top institutions back PDD
Bank of America maintains "Buy," raising target to $191 on strong domestic profits, lifting 2024/25 revenue by 6%/15% and non-GAAP net income by 16%/20%.
Per 13F filings, billionaire David Tepper's Appaloosa added 1.33 million PDD shares.
Goldman Sachs boosted holdings by 5.54 million (+101%), HHLR Advisors by 1.68 million (25.28% of portfolio), while PDD tops Gaoyi and ranks second at Jinglin.
Past earnings day performance
Over 12 quarters, PDD rose on earnings day with average move ±13.5%, max loss -15.9%, max gain +22.2%. Last year, it gained +3.5%, +18.1%, +15.4%, +19% post-earnings.
Current implied move: ±9% (vs. past four quarters' ±14%), signaling undervalued options.
Skew indicates slight bullish bias.
Source: U.S. Stock Research
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