Nvidia reports first-quarter earnings after the bell

Nvidia's fiscal first-quarter earnings are expected to show adjusted EPS of $0.93 on revenue of $43.31 billion, with guidance anticipated at $0.99 EPS on $45.9 billion in sales for the July quarter, reflecting continued strong demand for AI chips. Investors will focus on the impact of new export restrictions to China, particularly regarding the H20 chip, and any commentary from CEO Jensen Huang on the export control regime and sales efforts in regions like Saudi Arabia. The key indicator for market reaction will be Nvidia's confidence in sustained demand and supply for its Blackwell products, especially the GB200 racks, despite an expected deceleration in revenue growth from the previous year.

Analysis

Nvidia is poised to report its fiscal first-quarter earnings, with Wall Street anticipating adjusted earnings per share of 93 cents on $43.31 billion in revenue. Guidance for the subsequent July quarter is projected at 99 cents adjusted EPS on $45.9 billion in sales, underscoring continued robust demand for its AI chips, particularly graphics processors. A primary focus for investors will be the impact of U.S. export restrictions on China, specifically concerning the H20 chip—a modified Hopper AI chip for the Chinese market—which led Nvidia to state it would take a $5.5 billion writedown on inventory. Commentary from CEO Jensen Huang regarding these export controls, the company's strategy to navigate them, and recent efforts to sell AI infrastructure to foreign countries like Saudi Arabia, will be critical. The market will also closely scrutinize updates on the Blackwell GPU generation, particularly the supply and sustained demand for products like the GB200 racks currently shipping. As highlighted by Morgan Stanley analyst Joseph Moore, investor confidence in strong demand and an improving outlook for the GB200 could positively influence the stock, even if headline numbers meet expectations without significant change. While the anticipated 66% revenue growth for the April quarter is substantial, it represents a sharp deceleration from the prior year's period when revenue more than tripled. This growth is largely fueled by significant investments from a few giant cloud providers, or hyperscalers, such as Microsoft and Meta, who have indicated plans for continued aggressive spending on AI.

Key Decisions for Investors

• Investors should closely monitor Nvidia's management commentary on the quantifiable impact of China export restrictions on revenue, the status of the $5.5 billion inventory writedown, and the effectiveness of mitigation strategies, including market diversification efforts.
• Scrutinize the Q2 guidance carefully and any qualitative or quantitative updates on the demand trajectory and supply availability for the new Blackwell GPU architecture, particularly the GB200, as this is a key driver for sustained growth.
• Assess the sustainability of the reported growth rate in the context of the significant deceleration from the previous year and evaluate the company's confidence in continued strong demand from hyperscalers, which are crucial to its revenue.