What’s in Store for NVIDIA (NVDA) This Earnings Season?

NVIDIA Corporation NVDA is slated to release third-quarter fiscal 2021 results on Nov 18.

For the fiscal third quarter, the company expects revenues of $4.4 billion (+/-2%). The Zacks Consensus Estimate for the same is also pegged at $4.42 billion, calling for 46.6% growth, year on year.

The Zacks Consensus Estimate for quarterly earnings is pinned at $2.57, suggesting a year-over-year improvement of a whopping 44.4%.

The company’s earnings beat the Zacks Consensus Estimate in all of the preceding four quarters, the average surprise being 11.5%.

Let’s see how things have shaped up for the announcement.

Factors at Play

NVIDIA’s fiscal third-quarter performance is likely to have benefited from growth across all of its business segments except for automotive. The company’s growth opportunities in ray-traced gaming, rendering, high-performance computing and AI are likely to have been driving factors during the period in discussion.

NVIDIA Corporation Price and Consensus

NVIDIA Corporation Price and Consensus

NVIDIA Corporation price-consensus-chart | NVIDIA Corporation Quote

NVIDIA is also anticipated to have benefited from strength in its data-center business on the growing adoption of cloud-based solutions amid the coronavirus crisis-induced work-from-home wave. Increase in Hyperscale demand and growing adoption in the inference market are anticipated to have been tailwinds during the to-be-reported quarter.

Further, a series of blockbuster AAA titles, which pledged support for the NVIDIA RTX ray tracing technology, might have been a positive. In the fiscal third quarter, NVIDIA announced that Microsoft’s (MSFT) Minecraft game will feature the technology. In addition, the recently-released GeForce RTX SUPER GPUs are expected to have fortified its leadership in the high end of the market.

Additionally, the pandemic-induced remote-working wave is likely to have bolstered sales of graphic chips utilized in desktops and laptops. This, in turn, is anticipated to have aided the quarterly performance.

Nonetheless, disruptions in retail channel sales due to the global lockdown might have partially offset the benefit of solid demand for the remote-working and online-learning hardware infrastructure.

Moreover, the pandemic might have adversely impacted the company’s automotive segment during the quarter under review. Notably, travel restrictions as well as economic and business uncertainties have hit global vehicle sales hard.

What Our Model Says

Our proven model predicts an earnings beat for NVIDIA this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

NVIDIA currently carries a Zacks Rank of 2 and has an Earnings ESP of +1.75%.

Stocks With Favorable Combinations

Here are some other companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Spectrum Brands Holdings Inc. SPB has an Earnings ESP of +9.24% and sports a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lowe’s Companies LOW has an Earnings ESP of +8.85% and carries a Zacks Rank of 2, currently.

Workday Inc. WDAY has an Earnings ESP of +3.73% and currently holds a Zacks Rank of 3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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