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Nvidia (NVDA) will release its fiscal Q2 2025 earnings on Wednesday after the close of markets. As has been the case for over a year now, the company’s earnings will be closely watched by markets, and could impact not only its share price, but also that of other tech companies.
With a YTD gain of nearly 150%, Nvidia is the best-performing S&P 500 Index ($SPX) stock – a position it held in 2023, as well. However, most of Nvidia’s gains came in the first half of 2024. Since then it has traded largely sideways, especially considering the furious price moves that markets have grown accustomed to over the last couple of years.
Earlier this month, NVDA stock briefly plunged below $100, and entered bear market territory amid the global sell-off.
However, the shares have since rebounded smartly, and Nvidia also reclaimed its $3 trillion market cap. While the broader market recovery did play a part, markets have been getting bullish on Nvidia heading into the Q2 confessional, and multiple brokerages have said that they expect a beat. In this article, we’ll discuss whether Nvidia stock has run up too far and too fast ahead of the report.
Nvidia Q2 Earnings Preview
Nvidia reported a stellar set of numbers in fiscal Q1, and comfortably beat on both the topline and the bottom line. Markets sent the shares higher, and Nvidia added a cool $200 billion to its market cap in a single day.
Management guided for revenues of $28 billion at the midpoint in the fiscal Q2, which was well ahead of the $26.7 billion that analysts were then modeling. Despite their generous predictions about Nvidia’s earnings, analysts' forecasts have mostly erred on the conservative side, and the company has managed to beat estimates quite easily.
Analysts expect Nvidia to post revenues of $28.6 billion in the quarter that ended July 28. Brokerages have raised the Jensen Huang-led company’s earnings estimates in recent days, and the current estimate is now even higher than the top end of its guidance.
Consensus estimates call for Nvidia to report earnings per share (EPS) of $0.59 in the quarter – a YoY rise of 136%.
What to Watch in Nvidia’s Q2 Earnings Report
During Nvidia’s fiscal Q2 earnings call, it would be pertinent to watch out for the revenue guidance for the current quarter. Analysts expect the company’s revenues to rise by 74% in the current quarter and are modeling growth to fall to 57% in the next quarter. That said, these are still formidable numbers, especially as they are now coming from a relatively higher base.
Nvidia might also provide color on its upcoming Blackwell GPUs, whose shipments are reportedly delayed. Notably, during the Q1 earnings call, Nvidia was quite upbeat on the chip, and Huang expressed optimism that Nvidia “will see a lot of Blackwell revenue this year.”
Nvidia might also brief markets on the antitrust probe that the U.S. Department of Justice has launched over its dominance in the artificial intelligence (AI) chip market. The company may also address its China business, which has suffered after the U.S. barred it from selling its top-of-the-line AI chips to the Communist country, fearing their military use.
NVDA Stock Forecast
Nvidia has a consensus rating of “Strong Buy” from the 39 analysts in coverage. The bullishness is not hard to understand, and it would be borderline professional suicide for any sell-side analyst to recommend selling a stock that has been doubling every few months.
NVDA’s current mean target price is $141.65, which is 13.7% higher than Thursday’s closing prices. Its Street-high target price is $200, which is 60% higher. Since Nvidia’s parabolic rally began in 2023, analysts have often been behind the curve in raising its target price, and the stock has traded well ahead of Wall Street's average target price many times.
KeyBanc, Citi, Goldman Sachs, and Rosenblatt Securities are some of the brokerages that expect Nvidia to beat on Q2 earnings and provide better-than-expected guidance, and have reiterated their bullish bets in recent days.
Is NVDA Stock a Buy Ahead of Earnings?
The recently concluded earnings calls of so-called hyper-scalers show that they are not backing off from AI investments. Simply put, as tech giants like Meta Platforms (META) prepare for “years of AI investments,” it should keep Nvidia’s cash registers ringing, given its near-monopoly in that market.
That said, while Nvidia remains among the best growth names, I would be a bit wary after the sharp rally from the August lows. While I don’t see NVDA stock crashing after next week's report, given the current appetite for its AI chips, the margin of safety is a lot slimmer now than it was earlier this month. Expectations are sky-high for the chip designing behemoth, as Barron's perhaps summed up best by noting, "There’s a lot resting on Nvidia’s broad shoulders."
On the date of publication, Mohit Oberoi had a position in: NVDA , META . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
