AI Giant NVIDIA Set to Release Earnings: Expectations for the Stock
The 2025 Q1 earnings season is slowly grinding to a halt, with the bulk of S&P 500 companies already delivering their quarterly results. The period has so far been primarily positive, although commentary about the upcoming periods amid recent tariff talks has been the driving force behind post-earnings reactions.
And looming large this week is beloved NVIDIA NVDA, whose recent success has been fueled by the unrelenting AI frenzy. Shares have taken a breather in 2025 so far, barely in the green and nearly matching the S&P 500's performance.
Image Source: Zacks Investment Research
The DeepSeek news in early January really threw the market into a tantrum, partly explaining the muted performance in 2025 so far. But we've since learned that many companies remain committed to big CapEx plans concerning their AI infrastructure buildouts, a key development to keep in mind.
Let's take a closer look at what to expect from the tech titan.
Analysts have lowered their EPS expectations for the quarter to be reported over recent months, with the current $0.85 Zacks Consensus EPS estimate down 7% since March, suggesting 40% year-over-year growth.
Image Source: Zacks Investment Research
Top line revisions have largely remained stable, with the AI favorite expected to see 63% higher sales year-over-year. The growth rates here are undoubtedly impressive, underpinned by red-hot demand stemming from its Data Center products.
The Zacks Consensus estimate for Data Center sales presently stands at $38.5 billion, 70% higher than year-ago sales of $22.6 billion. The company has exceeded our consensus expectations handily regarding its Data Center results over recent periods, achieving six consecutive positive beats.
Below is a chart illustrating NVDA's Data Center sales on a quarterly basis.
Image Source: Zacks Investment Research
Unsurprisingly, commentary surrounding China will be critical, likely dictating the post-earnings reaction. For a quick refresher, the Trump administration imposed export limits on Nvidia's H20 chip in April, which is expected to cost the company $5.5 billion in charges.
But while the China picture may be a bit cloudy, other positive developments from other countries have emerged, including NVIDIA's recent deal with the Kingdom of Saudi Arabia (KSA). More specifically, HUMAIN, a subsidiary of Saudi Arabia's Public Investment Fund focused on AI, is making a major investment to build AI factories in KSA with a projected capacity of up to 500 megawatts powered by several hundred thousand of NVIDIA's most advanced GPUs over the next five years.
'This partnership with NVIDIA reflects SDAIA's commitment to harnessing and advancing the potential of data and AI through continuous innovation,' said H.E. Dr. Abdullah bin Sharaf Alghamdi, president of the SDAIA. 'It marks a significant step toward positioning the Kingdom as a leader among data- and AI-driven economies, and in building a knowledge-based society and an advanced digital economy aligned with the objectives of Saudi Vision 2030.'
Simply put, everybody wants to get their hands on NVIDIA's GPUs. China remains critical, but the recent deals demonstrate that the company can easily generate additional avenues of growth even when faced with restrictions.
Below is a chart illustrating NVIDIA's red-hot sales growth on a quarterly basis.
Image Source: Zacks Investment Research
Concerning the valuation picture, NVDA shares presently trade at a 28.8X forward 12-month earnings multiple, nearly half of the 50.1X five-year median and a fraction of 106.3X five-year highs. Unprecedented growth has kept valuation multiples muted, with the stock now trading at a 35% premium relative to the S&P 500, down from steep highs of 178% in 2024.
Image Source: Zacks Investment Research
NVIDIA's NVDA upcoming release will help cap off the Q1 reporting cycle, reflecting the most important release yet to come. Analysts have been bearish concerning the EPS outlook given profitability concerns stemming from tariff talks, but sales expectations have largely remained stable.
Investors will, of course, be laser-focused on the Data Center results, which have been the driving force behind the stock's immense success over recent years. The forecasted YoY growth rate for Data Center results does reflect a deceleration from recent periods but otherwise remains robust.
The China issue will also be at the forefront, given recent tariff talks, likely the most impactful force concerning the stock's post-earnings movement. However, recent deals with other countries bode well for the tech titan, reflecting its ability to generate avenues of growth amid tighter conditions.
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This article originally published on Zacks Investment Research (zacks.com).
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