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NVIDIA (NVDA) to Post Q3 Earnings: What's in the Offing?

NVIDIA Corporation NVDA is scheduled to report third-quarter fiscal 2020 results on Nov 14.

For the quarter, NVIDIA anticipates revenues of $2.9 billion (+/-2%). The Zacks Consensus Estimate is currently pegged at $2.9 billion, indicating an 8.8% fall from the year-ago reported figure.

The consensus mark for earnings stands at $1.57, implying a plunge of 14.7% from the year-earlier reported number.

NVIDIA Corporation Price and EPS Surprise

NVIDIA Corporation Price and EPS Surprise

NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote

In the trailing four quarters, the company’s earnings surpassed the Zacks Consensus Estimate thrice and missed once, the average positive surprise being 4.5%.

In the last reported quarter, the company’s non-GAAP earnings of $1.24 per share topped the Zacks Consensus Estimate by 7.8% but tumbled 36% year over year. However, the bottom line improved 41% sequentially.

Revenues of $2.58 billion beat the Zacks Consensus Estimate of $2.55 billion but declined 17% year over year. However, the top line rose 16% sequentially. Strength in automotive, and OEM and IP end-markets drove the top line. However, weakness in data center market was a dampener.

Factors at Play

NVIDIA’s growth opportunities in ray-traced gaming, rendering, high-performance computing, AI and self-driving cars might reflect positively in fiscal third-quarter results.

A strong uptick in PC gamers, eSports players and higher spending on the gaming GPUs might have been tailwinds for the top line in the quarter. Moreover, improvement in gaming product mix is likely to have been a margin booster.

Production ramp up of two new models of Nintendo Switch gaming consoles is expected to have benefited the company’s console business.

Moreover, growing demand for NVIDIA’s Tesla T4 GPU is a positive. Growth in inference revenues is likely to have been a steady tailwind in the September quarter.

During the quarter, the company announced a powerful GPU-enabled conversational AI platform, Microsoft MSFT being among its early adopters. This is likely to have positively impacted its quarterly performance. Furthermore, partnerships with the likes of VMware VMW is likely to have benefited the company’s GPU business in the fiscal third quarter.

NVIDIA is also expected to have gained from increasing Pro Visualization revenues, driven by strength in mobile workstation products with strong demand for new thin and light form factors. Moreover, rising adoption of AI-based smart cockpit infotainment solutions is likely to have driven automotive revenues in the to-be-reported quarter.

However, continued shortage of Intel INTC processors might have affected sales of gaming GPUs for laptops, which is likely to have hurt NVIDIA’s GPU demand during the fiscal third quarter.

NVIDIA currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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