When it comes to corporate profits, it’s no secret that investors are more focused on the future than the past. Exceeding expectations for the latest quarter doesn’t matter much if a company’s outlook is disappointing.
But in the case of Nvidia Corp.
which releases its results on Tuesday afternoon, Wall Street could be looking particularly far ahead. According to UBS analyst Timothy Arcuri, the “key stock debate” is over where calendar year 2025 is headed, as investors appear to fear that clients will have digested their big purchases by then, with thus making them less eager to buy new ones.
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We do not yet know if Wall Street will get the answers it expects on Tuesday. Arcuri himself doubts it, writing that executives will “likely maintain a similar tone” to the one they expressed last quarter, when they said they had several quarters of visibility into business trends, even though it is “unlikely” there will be much to do. a solid speech on 2025.
Arcuri expects Nvidia to report “largely flat” earnings per share for calendar year 2025, which is notable for a company expected to rack up huge continued earnings gains in the present. Adjusted earnings per share are expected to have soared nearly 500% to $3.37 in the latest quarter, and Nvidia is expected to be the largest contributor to quarterly earnings growth for the entire S&P 500 SPX.
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Toshiya Hari of Goldman Sachs took a similar view, noting that Wall Street appears worried about a decline in data center revenue in 2025 as long delivery times now push customers to order “above and beyond of real demand.
“(V)erifying or disproving the performance of Nvidia’s data center business in 2025 (or any other given year) is extremely difficult and next week’s earnings call is unlikely to settle this debate,” he wrote.
Nvidia shares are up 245% year to date, compared to an 18% increase for the S&P 500 over the same period.
Wall Street’s fixation on the distant future could overshadow what should be another stunning report. The midpoint of Nvidia’s third-quarter revenue forecast, at $16 billion, would already be more than 18% higher than the record total Nvidia posted three months ago, and the FactSet consensus of $16.2 billion. dollars is above this midpoint.
Many analysts expect Nvidia to handily exceed that consensus number, with Christopher Rolland, an analyst at Susquehanna Financial Group, writing that the “whispered” number – or Wall Street’s more informal target – is certainly not clear, although he himself expects $17 billion in revenue for the last quarter.
“We expect another clear beat and raise, but a firm assessment of the ‘whisper’ remains a little elusive,” Rolland said. He expects the company to post $20 billion in revenue for the current quarter, compared to the FactSet consensus of $18 billion.
One of the key questions is how management sees the latest developments in U.S.-China relations affecting the company. The United States recently introduced new export restrictions on the sale of advanced chip technologies to China; Although some Nvidia products are included, the company said it does not expect a significant near-term impact on its bottom line.
“Despite high expectations, the stock should continue to outperform if management minimizes the impact of China (even in (calendar year 2024)) and provides visibility on order trends (in the second half) (for the year calendar 2024), which we think is likely,” Raymond James analyst Srini Pajjuri wrote in a note to clients.
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