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NVIDIA’s pre-earnings: What to know

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Tech giant NVIDIA (Nasdaq: NVDA) is expected to release fiscal Q2 2022 earnings after market close today.

NVIDIA Corp. Sales have skyrocketed during the pandemic boosted by solid demand for their products and the ever-rising prices of chips due to the semiconductor shortage that the industry has been experiencing these past months. Now that results from the last quarter are to be reported, investors are taking a close look at the stock and waiting to see how the company fares against expectations.

Experts say that investors should focus on two key indicators on the upcoming earnings report: The adjusted earnings per share or EPS and the Gross Margin – a measurement of how much profit is made per dollar of sales. In both cases, Wall Street’s expectations are optimistic, expecting a revenue growth upwards from 60% and an EPS growth of over 80%.

The optimism is based on the company only reporting lower year-over-year stats on four quarters from the last 18. Apart from those four negative Quarters, the company has had impressive growth, and earnings reports are usually positive. However, experts expect the growth to be slower- and investors need to see how this plays out in the prices.

Expectations on key NVIDIA stats

The company is expected to turn in a report of around $6.3 billion in revenue, with an adjusted earning-per-share of more than $4 and a gross margin upwards of 60%. Year over year, we need to compare this to FY 2021 Q2, in which the company reported a revenue of $3.9 Billion, an adjusted EPS of $2.18, and a 66% gross margin.

As a company that sells a commodity, Investors will look closely at the gross margin presented in the report. As the prices of commodities are highly cyclical, saving on costs and maximizing profit is seen as a positive move when good times are rolling and may impact stock prices more than any other indicator. Therefore, keeping a higher than 60% gross margin is seen positively by investors and experts alike, thus keeping the company positive.

At the time of writing, NVDA stock remained around $193, with a price decrease from a previous close of more than $194. The expectation on the report is significant and might change the trend.

What are your expectations of NVIDIA corp’s report? Are they going to meet expectations? Let us know in the comments below.

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