• Analysts expect NVIDIA to announce a 17% revenue growth this quarter.
• Gaming revenue will be the most watched metric in Q2.
• What new growth drivers are emerging as support pillars for future growth, and why?

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NVIDIA (NSDQ:NVDA) will be reporting its second quarter fiscal 2017 earnings on August 11th, 2016 after markets close. Analyst consensus estimates are at 0.$37 earnings per share with revenues coming in at $1.35 billion. NVIDIA reported $1.153 billion in revenues during the second quarter of 2015, so the market is expecting the semiconductor company to report a 17% revenue growth, 4% more than the growth they achieved during the first quarter of this year.

During the first quarter earnings call, the company said that it is expecting $1.35 billion in revenues, plus or minus 2%, in line with what the analysts are estimating for the quarter as well. NVIDIA’s GPU business grew 15% and the Tegra processor business was up 10%.

The GPU Bid

During the first quarter, gaming revenue was up 17% year over year, reaching $687 million, accounting for nearly 60% of the company’s revenue; and as such, it will be crucial for the company to match or exceed that performance in Q2. With the gaming market growing steadily, and considering NVIDIA’s lead in this segment and the launch of Pascal GPUs, these factors should help the company maintain its momentum in this segment. And if this segment keeps its growth intact, it will make sure NVIDIA’s stock keeps moving up as well.

“Let’s start out with our gaming platform. Gaming revenue increased 17% year on year to $687 million, momentum carried forward from the holiday season helped by the continued strength of Maxwell-based GTX processors. Last weekend at DreamHack Austin, we unveiled GeForce GTX 1080 and GTX 1070, our first Pascal GPUs for gamers. They represent a quantum leap for gaming and immersive VR experiences, delivering the biggest performance games from the previous generation architect in a decade. Media reports and gamers have been unanimously enthusiastic.”

Q1-16 Earnings Call

NVIDIA’s New Growth Drivers

The other business platform that can surprise us is their datacenter business, which grew 63% year over year during the first three months of this fiscal compared to a year earlier. Though at $143 million in quarterly revenues, the datacenter group’s contribution to overall numbers is small, NVIDIA only needs a few million dollars’ growth to spring a surprise.

NVIDIA has achieved slow and steady growth over the last ten years, and the trend should continue this year as well. With the company trouncing its competition on several fronts, and multiple product launches this year, the growth of their futuristic datacenter and automotive business should fuel the company’s growth during the second quarter as well.

What Will Fuel Q2 Results – and Beyond?

If you are an investor, keep a close eye on how the company’s datacenter and automotive businesses are doing. As of now, these are the two revenue drivers that can take the company to a whole new level. The growth of cloud computing and use of artificial intelligence is on the rise, and the computational performance requirement is extremely high for such systems, making GPU performance a mission-critical component of their operations. NVIDIA’s GPU’s already power some of the world’s cutting edge AI platforms such as IBM Watson and Facebook’s Big Sur, so it is still a growing business segment that can be admirably augmented by growth in data center and automobiles.

With analyst estimates in line with the company’s own expectations, the market is obviously not expecting any major surprises from NVIDIA during the second quarter, and neither am I.