Image Source: Pixabay

Nvidia Corporation (NVDA - Free Report) is likely to beat expectations when it reports first-quarter fiscal 2024 results after market close on May 24.

For the fiscal first quarter, the company expects revenues of $6.5 billion (+/-2%). The Zacks Consensus Estimate for the same is pegged at $6.51 billion, indicating a 21.5% decline from the year-ago reported figure.

The Zacks Consensus Estimate for quarterly earnings is pegged at 92 cents per share. This suggests a year-over-year decline of 32.4%.

The company’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being -3.2%.

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

Nvidia Corporation Price and EPS Surprise

Nvidia Corporation price-eps-surprise | Nvidia Corporation Quote

Factors to Consider

Nvidia’s first-quarter performance is likely to have benefited from the recovery across its Gaming and Professional Visualization end markets. The Gaming end market’s last quarter results had shown early signs of recovery as inventory with channel partners reached normal levels. The company also registered strong demand across most regions for its gaming products.

Revenues from the Gaming end market increased 16% sequentially in the last reported quarter. Nvidia’s Professional Visualization segment performance also reflected recovery, with revenues increasing 13% sequentially. We believe that the trend is likely to have continued in the first quarter for both end markets.

Moreover, the continued strength of its Datacenter business on the growing adoption of cloud-based solutions amid the growing hybrid working trend is expected to have boosted NVDA’s first-quarter revenues. An increase in Hyperscale demand and growing adoption in the inference market are likely to have been tailwinds in the to-be-reported quarter.

Further, the company’s Automotive segment showed an improvement in trends in five of the last seven quarters. The positive trend is likely to have continued in the fiscal first quarter, mainly due to increasing investments in self-driving and artificial intelligence cockpit solutions.

However, we opine that ongoing macroeconomic headwinds, like high inflation and interest rates, are likely to have continued to hurt the sales of Nvidia’s desktop workstation GPUs in the first quarter. Additionally, disruptions in retail channel sales due to travel restrictions and social-distancing measures implemented across several parts of China might have weighed on the overall financial performance in the fiscal first quarter.

Earnings Whispers

Our proven model predicts an earnings beat for NVDA this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (94 cents per share) and the Zacks Consensus Estimate (92 cents per share), is +2.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Nvidia carries a Zacks Rank #3.

More By This Author:

Weak Gaming Chip Demand To Hurt Nvidia's Q1 Earnings
Best Income Stocks To Buy For May 19
Is The Tide Turning For Homebuilding ETFs?