Nvidia’s Earnings Report: Is Nvidia Still Inflation-Proof?

Nvidia Corp., the renowned American multinational technology giant, is gearing up to unveil its earnings report for the fiscal quarter ending April 2024 on May 22nd, post-market closure. As the world’s third most valuable company, boasting a market capitalization surpassing $2.2 trillion, Nvidia specializes in designing and producing computer graphics processors, chipsets, and associated multimedia software. Widely regarded as “an inflation hedge tool comparable to gold,” this article delves into whether Nvidia can uphold this reputation through its imminent earnings disclosure.

Impressive Revenue Growth

In its latest reported quarter, Nvidia achieved a remarkable revenue milestone, totaling $22.1 billion, signifying a robust 22% increase from Q3 2024 and an astounding 265% surge year-over-year. For fiscal year 2024, revenue surged by an impressive 126% year-over-year, reaching $60.9 billion. Operating income also witnessed a significant ascent, escalating by 31% quarter-over-quarter and a staggering 983% year-over-year, culminating at $13.62 billion. Nvidia’s gross margin experienced a notable enhancement, climbing 2.0 points quarterly and 12.7 points from the preceding year, at 76.0%.

Nvidia’s Data Center segment remains a pivotal driver of growth, recording sales revenue of $18.4 billion in the previous quarter, reflecting a robust 27% increase of the prior quarter and a remarkable 409% surge year-over-year.

Contributions from Other Segments

The Auto segment crossed the $1 billion revenue mark last year, while software and services attained an annualized revenue run rate of $1 billion. Demand for Nvidia’s chips and related products remains robust, with anticipated supply constraints for next-generation products. Adopting AI technology in healthcare and financial services sectors further augments Nvidia’s growth trajectory.

In the gaming segment, Nvidia reported $2.9 billion in sales revenue, which remained steady from the previous quarter but registered a notable 56% increase year-over-year. The company has shipped over 100 million AI-ready RTX PCs and workstations. The Professional Visualization segment witnessed an 11% quarter-over-quarter and 105% year-over-year revenue surge, reaching $463 million. The Automotive segment reported $281 million in revenue, reflecting an 8% quarterly increase but a 4% year-over-year decline. EV makers such as Li Auto, Great Wall Motor, ZEEKR, and Xiaomi utilize Nvidia’s AI car computers.

FY 2024 Segment Performance

Throughout FY 2024, all segments reported revenue gains compared to the previous year:

• Data Center: $47.5 billion (up 217%)
• Gaming: $10.4 billion (up 15%)
• Professional Visualization: $1.6 billion (up 1%)
• Automotive: $1.1 billion (up 21%)

Projections and Technical Analysis

According to S&P, Nvidia’s sales revenue is projected to reach $24.5 billion, up 10.7% from the previous quarter and over 240% year-over-year. Operating profit and net income are expected to increase to $16.3 billion and $12.8 billion, respectively. The net margin is anticipated to decline to 52.45%, while the operating margin is predicted to decrease to 66.65%.

Nvidia’s EPS is estimated to reach $5.18, significantly higher than $0.82 in Q1 2024. The share price has resumed its upward trajectory, gaining support above $769.40. The MACD indicator remains positive, while the RSI hovers around 70, indicating potential for further gains. The nearest resistance level is the all-time high at $973.68, with potential targets at $1113.70 and $1334.70 based on Fibonacci Expansion.

Conclusion

With its robust revenue growth, particularly in the Data Center segment, and prominence as a leader in AI and graphics technology, Nvidia is a crucial player in the tech industry. Will Nvidia continue to assert itself as a reliable inflation hedge? Stay tuned for the earnings report to unveil the answer.