Key Takeaways
- Nvidia Data Center revenue is expected to reach $28.9 billion, which is nearly 100% growth year-on-year.
- For the quarter, the Zacks Estimate for Gaming revenues stands at $3.1 billion, 10% higher than last year.
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It’s nearly time again for beloved Nvidia NVDA to deliver its quarterly results, with the release undoubtedly the most closely watched of the Q3 cycle. Other players involved in the AI frenzy have delivered their results, which have overall shown underlying momentum and robust demand.
How does the AI favorite stack up heading into its release? Let’s take a closer look.
Nvidia Data Center in Focus
Nvidia’s Data Center results have continued to be remarkable, consistently blowing away our consensus expectations in recent quarters. As shown below, the beats have been quite sizable, with the most recent totaling a sizable $1.4 billion amid another period of scorching-hot demand.
Investors can likely expect another robust showing within its Data Center, with our $28.9 billion consensus estimate suggesting nearly 100% growth year-over-year.
Image Source: Zacks Investment Research
CEO Jensen Huang provided a bullish long-term comment following the Q2 release, confirming strong demand for Hopper and overall anticipation for Blackwell. ‘NVIDIA achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI.’
While Data Center results will undoubtedly take center stage, the company’s Gaming segment has shown nice growth over recent periods, another key metric to watch in the release. For the quarter, the Zacks Consensus Estimate for Gaming revenues stands at $3.1 billion, 10% higher than the year-ago figure.
As shown below, NVDA’s Gaming results have consistently been positive against expectations as of late.
Image Source: Zacks Investment Research
The company’s margins have also been historically strong in recent quarters, aiding its profitability picture in a big way. Please note that the chart below is on a trailing twelve-month basis.
Image Source: Zacks Investment Research
Given its historical rise, the valuation picture has become a concern among some. Still, multiples aren’t expensive on a relative basis, with the current 38.7X forward 12-month earnings multiple well beneath the 50.7X five-year median and five-year highs of 106.3X.
In addition, the current PEG ratio works out to 1.1X, again well below the 2.6X five-year median and 5.5X five-year highs. As shown below, the multiple even compares favorably to the Zacks Computer & Technology sector average of 1.5X.
Image Source: Zacks Investment Research
Bottom Line
Beloved Nvidia NVDA is on the reporting docket this week, with its results scheduled for after the market’s close on Wednesday. The company’s results will finally wrap up the reporting period for the broader Mag 7 group, also representing the most important release of the bunch.
The company’s outlook continues to remain bullish, with the stock sporting a Zacks Rank #1 (Strong Buy) heading into the release.
Image Source: Zacks Investment Research
Investors can expect extensive commentary surrounding Data Center results, which have fueled the company’s meteoric rise over the last several years. It’s reasonable to assume that it will be another record-breaking period for its Data Center, supported by bullish commentary from CEO Jensen Huang in its Q2 release.
In addition, the company’s Gaming results should also get some attention from investors, which have rebounded nicely over recent periods and consistently exceeded consensus expectations.
The valuation picture isn’t unattractive, with current multiples well below historical values. It’s worth noting here that NVDA shares traded well above current valuation levels in 2020 and 2021 when the AI theme had yet to emerge fully. Historically strong growth has helped keep multiples now.
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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.
