Chip-making giant Nvidia (NASDAQ:NVDA) will announce its third-quarter earnings today in what is sure to be one of the stock market’s most eagerly-anticipated events of the quarter. The artificial intelligence (AI) company is one of the top stocks with investors – it was the third most-bought stock on retail platform Interactive Investor last month.
Josh Gilbert, market analyst at investment platform eToro, asks “can the biggest company in the world beat expectations and raise Q4 guidance again?” In his view, “the answer is yes”.
Over the last two years, Nvidia has gone from a market capitalisation of just over $400 billion to being the world’s most valuable company, driven by its unrivalled status as the supplier of graphical processing units (GPUs) that have underpinned the rise of AI. It is the bellwether member of the ‘Magnificent Seven’ stocks that are seen as driving the AI and technology boom.
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Its dominance of the stock market has led to it featuring in most of the top funds and trusts in equity investing.
Nvidia’s revenue and earnings growth during this period have been eye-watering, and have set market expectations for continued growth extremely high.
However, for Gilbert’s optimism to be well-founded, Nvidia’s earnings will need to surpass already lofty expectations and overcome a rare set of headwinds, as the rocky launch of its new Blackwell GPU seems set to define how Nvidia’s share price will move after results are announced.
In the last 12 months alone, Nvidia’s share price has gained 198%. Since Nvidia’s last earnings release in August, Nvidia’s shares have gained 17%.
When does Nvidia announce earnings?
Nvidia is scheduled to release its earnings results for the Q3 of FY 2025 after US markets close on 20 November. This happens at 4.30pm Eastern time due to US stock market opening times, or 9.30pm in the UK.
Nvidia’s stock is likely to move during after-hours trading in the US. Investors hoping to follow news and updates about the earnings release in real time can follow this live blog on MoneyWeek’s US sister site, Kiplinger.
What do analysts expect for Nvidia’s earnings and revenue?
Analysts polled by the London Stock Exchange Group (LSEG) are forecasting quarterly revenue of $33.16 billion and earnings per share (EPS) of $0.75 for Nvidia’s Q3 earnings. Last quarter, Nvidia issued guidance of $32.5 billion for Q3. It is notable, therefore, that analysts expect Nvidia to beat its own forecasts.
According to Gilbert, however, the market has baked in expectations that Nvidia will even outdo these numbers. “The market now expects Nvidia to not only beat estimates but also raise its guidance significantly, building plenty of optimism for 2025.”
Nvidia’s revised guidance – the revenue figures that it outlines for the next quarter – could be one of the most influential aspects of the earnings release. Analysts polled by LSEG currently forecast $37.09 billion. Expect a market reaction depending on whether Nvidia’s own outlook for the quarter is above or below this number.
Nvidia Blackwell: will it drive revenue?
Nvidia’s CEO Jensen Huang has described demand for Nvidia’s next-generation AI GPU chip, ‘Blackwell’, as “insane”. In October, Barron’s reported that Huang had told Morgan Stanley analysts that Blackwell chips are already booked out for the next 12 months, meaning an order placed today won’t be delivered for another year.
While this is expected to be a major revenue driver, it also poses complications for Nvidia. Blackwell’s rollout hasn’t been smooth so far. The Information reported this week that Blackwell GPUs have been prone to overheating when connected to each other on the server racks Nvidia has repeatedly redesigned for the chip. A further redesign could slow GPU shipments and delay the opening of new data centres for Nvidia’s big tech customers.
In some respects, then, the market may be more concerned with the outlook for Blackwell sales next quarter than the results for this quarter. “It's all about Blackwell right now from an investor perspective," Hans Mosesmann, analyst at Rosenblatt, told Reuters.
Forecasts for Blackwell’s fourth-quarter revenue range from the $5-6 billion that Morgan Stanley analysts expect to the $12-13 billion forecast by Spear Invest.
Is Nvidia a buy?
Investors should consider the level of risk involved in a stock trading at the levels Nvidia has reached.
Gilbert’s view that the market expects Nvidia to beat analyst expectations and raise its guidance underscores how used investors have become to Nvidia overdelivering. With high expectations, however, comes a heavy risk of disappointment.
“Expectations almost seem unattainable”, says Gilbert. “The market may be disappointed if we don’t get a big raise on guidance, similar to last quarter.”
Given that analysts expect Nvidia’s revenue growth to fall below 100% for the first time in six quarters, there is every chance that the market’s reaction could be negative even if Nvidia meets current expectations. A miss could see a sharp correction: Gilbert highlights that options pricing indicates a potential 8% swing in either direction.
Longer term, it is also difficult to predict how the ongoing trade war with China will play out. US sanctions against AI-ready chip exports to the country have already hampered Nvidia’s growth, and the incoming Trump administration is expected to adopt an even more hostile stance.
However, despite the elevated expectations baked into Nvidia’s current valuation, industry analysts expect Nvidia’s stock to keep gaining over the next 12 months. According to Kiplinger, industry analysts revised their price targets for Nvidia upwards by an average of 5% in a week in the run-up to the earnings release.
The median target among analysts polled by LSEG of $165 implies approximately 12.2% gains from Nvidia’s 19 November close price. This is sedate compared to its previous explosive gains, but still worth exposure if it happens.
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