As Nvidia gets ready to announce its earnings for the second quarter of 2024, investors want to know if the darling of US chip stocks can regain recently lost ground.

Key takeaways

Nvidia will release its Q2 results on 28 August 2024

Revenue of $28,544 billion: +211.31% year-on-year (YoY)

Q2 earnings per share of $0.64 expected

Consensus of analysts ‘buy’ rating on the stock

When will Nvidia share its latest earnings information?

Nvidia will reveal its Q2 financial results after the stock market closes on Wednesday, 28 August 2024.

LSEG Data & Analytics analyst Nvidia recommendations

LSEG Data & Analytics data shows a consensus analyst rating of ‘buy’ for Nvidia – 19 strong buy, 33 buy and 5 hold (as of 15 August 2024).

Source: Refinitiv

Reasons for further revenue growth

Heading into Nvidia’s Q2 earnings results, expectations are high for the graphics chip maker thanks to its leadership position in several key secular growth markets.

Over the past year, Nvidia has seen tremendous demand growth across its various end markets, led by data centres and gaming. In data centres, adoption of AI and machine learning has fuelled robust sales of Nvidia's specialized GPUs and networking products. The company has also benefited as more enterprises move workloads to the cloud. Meanwhile, Nvidia's gaming segment continues to see strong tailwinds thanks to the rise of eSports, game streaming services, and steady launches of blockbuster titles optimized for Nvidia hardware.

Nvidia's data centre segment, which includes sales of GPUs, networking gear, and AI software, is projected to increase further as major hyperscale customers like Amazon AWS, Microsoft Azure, and Alphabet GCP are rapidly adopting Nvidia chips to power AI workloads.

Ongoing strong demand for the latest Nvidia GPUs for gaming and creative applications is expected to remain a key catalyst in revenue growth.

Nvidia's automotive computing platforms are being adopted by more electric and autonomous vehicle makers, creating further demand for the company’s chips. Additionally, the company's Omniverse 3D simulation platform over the past year saw triple-digit customer growth, signalling future enterprise software upside.

Potential challenges

Nvidia faces some potential headwinds that could impact the upcoming earnings report such as supply chain constraints which may limit the upside. Though improving, foundry and component shortages could restrict Nvidia from fully meeting elevated demand. Any indication that supply issues are not abating could disappoint investors.

Demand slowdown in the PC market due to tough macroeconomic conditions may weaken graphics segment performance. This would dampen overall earnings growth.

Potential macroeconomic uncertainty may curb business spending should economic conditions deteriorate. This would have an outsized impact on Nvidia's data centre and enterprise segments.

Increasing competition from the likes of AMD and Intel, who have also heavily been investing in AI-focused chips, and big tech and automotive companies developing their own AI chips could potentially reduce demand for Nvidia’s offerings.

Despite these risks, Wall Street remains overwhelmingly bullish on Nvidia stock heading into the Q2 earnings result. Investors are focused on Nvidia's long-term potential in AI, high-performance computing, autonomous vehicles, and the metaverse. Execution against these opportunities is likely to drive share price momentum post-earnings.

Nvidia – technical view

The Nvidia share price, up over 145% year-to-date despite its June-to-August 35% drop, is flirting with its $118.04-to-$120.16 resistance zone, made up of the late June low and early August high.

Were it to be exceeded on a weekly chart closing basis on Friday, the way would be open for its June record high at $140.76 to be back in sight.

Nvidia Weekly Chart

Source: TradingView

This bullish view will remain intact while the early August low at $90.69 holds ona weekly chart closing basis.

For a medium-term top to be formed, the Nvidia share price would have to fall through its $90.69 early August low, in which case a further decline to the 200-day simple moving average (SMA) at $83.14 and the April trough at $75.61 may be on the cards.

Nvidia Daily Chart

Source: TradingView

A rise and daily chart close above the 23 July high at $124.69 would likely lead to a continuation of the medium-term uptrend.

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