Nvidia revenues expected to triple as investors eagerly await Q1 results

The last time Nvidia announced its quarterly results the chipmaker recorded the largest one-day gain in Wall Street history and so all eyes will be on the firm when it publishes its first quarter figures on Wednesday (22 May) after US markets close. 

The Californian company, which started life in 1993 as a specialist provider of 3D graphics for computer games, is expected to post quarterly revenues of around $24bn - a jump of $17bn compared to the same period last year. However, its share price slipped slightly during early morning trading on Tuesday (21 May).

A boom in artificial intelligence (AI), and billions of pounds worth of sales to the biggest tech companies, has seen Nvidia become the world’s third-most valuable public company behind Apple and Microsoft, having overtaken Alphabet, which owns Google, in February and the state-owned oil giant Saudi Aramco in March.

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Susannah Streeter, head of money and markets at Hargreaves Lansdown, told MoneyWeek: “There is a lot of analyst optimism bubbling ahead of the first quarter results with an expectation that revenue will have more than trebled. The market is expecting sales to come in ahead of company guidance of $24bn. Arguably, in Nvidia’s case, the confidence around the artificial intelligence boom is much more than simple hype.”

Russ Mould, investment director at AJ Bell, agrees. He says: “The AI hype-train is not only rolling but delivering as far as Nvidia is concerned. The market is clearly geared up for another upside surprise relative to the guidance provided by chief executive Jense Huang alongside the fourth quarter results in January.”

Mould adds that any further guidance from “Huang for the second quarter will be just as important as the actual numbers for the first”.

How popular is Nvidia?

Nvidia has been the best-performing stock in the S&P 500 over the past 12 months, with a gain of more than 200%, largely thanks to the shift towards generative AI and accelerated computing. On Monday, Barclays increased its share price target for the firm from $850 to $1,100. 

Mould says: “So powerful has been this trend [towards generative AI] that the company simply demolished consensus sales and profit forecasts in all four quarters of the fiscal year to January 2024, even though analysts consistently upgraded their numbers for each report.”

And the sense is that there are a lot more gains to be had. Streeter adds: “On a rolling 12-month-view, the 34 times earnings multiple doesn’t feel like bubble territory, as long as momentum in the data centre division can continue to offset weakness in areas such as automotive. 

“With other tech giants accelerating their AI projects, demand for Nvidia’s products looks insatiable, and the continuing evolution of the company’s technology stack means it's well-placed to maintain its dominant position.’’

The company is based in Santa Clara, California and designs and makes graphics processing units (GPUs), which are used in a variety of ways, such as video games, cryptocurrency mining and autonomous driving technology. 

Now, the trillion-dollar company is focused on AI. The CEO told CNBC in an interview last year that he changed the company a decade ago so that “every chip that we made was focused on artificial intelligence”.