Nvidia is set to report its first-quarter fiscal year 2025 earnings on May 22, a highly anticipated event that will either support or challenge the company’s massive $2.2 trillion valuation and the investment community’s fascination with AI stocks. The market is eagerly awaiting these results, as they will provide insight into Nvidia’s growth potential and the future of AI investing.
Nvidia’s journey into AI began in 2012 with the launch of the AlexNet AI application, powered by the company’s programmable GPUs. This marked a significant strategic shift for Nvidia, positioning them as a leader in AI solutions. Fast forward to 2023, and the launch of ChatGPT ignited a race to develop generative AI solutions, with Nvidia emerging as the dominant player in AI hardware and software.
The company’s fiscal year 2024 earnings highlighted a surge in demand for its AI products, particularly in its Data Center division, which saw a 217% increase in annual revenue compared to the previous year. This growth, coupled with a 126% increase in company-wide revenue, led to a tripling of Nvidia’s stock price between May 2023 and May 2024, sparking discussions about the stock’s valuation.
Key metrics to watch in Nvidia’s first-quarter earnings report include revenue growth, particularly in the Data Center and Gaming divisions, as well as gross margin and operating expenses. Analysts are expecting an adjusted, diluted EPS of $5.57 for the quarter, representing impressive growth compared to the previous year. The company has a history of positive revenue and earnings surprises, suggesting that the official revenue guidance of $24 billion may be conservative.
Looking ahead, Nvidia faces challenges such as growing competition from other chip makers, investor expectations for AI stocks, supply chain disruptions, and geopolitical factors. Despite these challenges, the company’s biggest opportunity lies in product development, with the upcoming launch of Blackwell GPUs expected to further solidify Nvidia’s position as a leader in the AI market.
The consensus price target for NVDA stock is $999, indicating a potential 12.5% upside. Analysts are optimistic about the company’s long-term outlook, with expectations for continued growth in fiscal years 2025 and 2026. Ultimately, investors will be closely watching Nvidia’s first-quarter results to gauge the stock’s valuation and the future of AI investing, with the potential for another rally in NVDA stock depending on the outcome.
