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Nvidia Earnings: What to Watch on Wednesday After the Market Close

By Beth McKenna – Updated Aug 17, 2021 at 11:46AM

Key Points

  • Wall Street expects fiscal Q2 year-over-year revenue and adjusted EPS to surge 64% and 89%, respectively.
  • News about the status of the pending Arm acquisition could move the stock in either direction.

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Nvidia's stock has returned 53% so far this year, so the tech and gaming giant has much to prove when it releases fiscal second-quarter earnings.

NVIDIA (NVDA 1.55%) is slated to report its second-quarter results for fiscal 2022 after the market close on Wednesday, Aug. 18. 

Investors in the graphics chip specialist will likely be approaching the report with optimism. The company has beaten the Wall Street consensus earnings estimate in at least the last four consecutive quarters.

That said, investors might be also be feeling somewhat concerned about the current or eventual impact to Nvidia from some cryptocurrency miners scooping up its GeForce gaming graphics processing units.

In 2021, Nvidia stock has returned 52.9% through Aug. 16. The S&P 500 index has returned 20.3% over this period.

A silhouette of a person's head amid a rendering of a computer motherboard.

Image source: Getty Images.

Nvidia's key numbers

Here are benchmarks to use to gauge the relative strength of the tech company's top- and bottom-line results.

Metric Fiscal Q2 2021 Result Fiscal Q2 2022 Wall Street Estimate Wall Street's Projected Growth
Revenue $3.87 billion $6.33 billion 64%
Adjusted earnings per share $0.54* $1.02 89%

Data sources: Nvidia and Yahoo! Finance. Fiscal Q2 2022 ended on Aug. 1, 2021. *Adjusted to reflect 4-for-1 stock split in July, which increased outstanding share count by a factor of four.

Management guided for fiscal Q2 revenue of $6.3 billion.

For context, in fiscal Q1, Nvidia's revenue jumped 84% year over year (and 13% sequentially) to a record $5.66 billion. Growth was driven by record revenue in the gaming, data center, and professional visualization platforms. EPS on the basis of generally accepted accounting principles (GAAP) soared 106% year over year to $3.03, and adjusted EPS surged 103% to $3.66.

Wall Street had been expecting fiscal Q1 revenue and adjusted EPS of $5.41 billion and $3.28, respectively, so Nvidia sped by both estimates. 

Platform performance

Here's how the platforms performed last quarter:

Platform

Fiscal Q1 2022 Revenue

Change (YOY)

Change (QOQ)

Gaming

 $2.76 billion 

106% 11%

Data center

 $2.05 billion

79% 8%

Professional visualization

 $372 million

 21%

21%

Automotive

 $154 million

(1%) 6%

OEM and IP

 $327 million

137% 114%

Total

 $5.66 billion

84%

13%

Data source: Nvidia. OEM and IP = original equipment manufacturer and intellectual property; this is not a target platform. YOY = year over year. QOQ = quarter over quarter.

As usual, investors should focus on the two largest platforms, computer gaming and data center, which together accounted for about 85% of the company's total revenue last quarter. If and when the pending Arm acquisition closes, the data center revenue will surge, and the two largest platforms will account for an even larger percentage of total revenue.

In last quarter's CFO commentary, Colette Kress said gaming business growth was driven by continued strong sales of the GeForce RTX 30 Series, based on the company's Ampere graphics processing unit architecture. She added that management believes the gaming platform also benefited from some cryptocurrency miners buying its GeForce cards, but "it is hard to determine to what extent."

Nvidia has recently taken two steps to address this issue, which makes it more challenging for gamers to get the company's new GeForce cards. First, it began selling the cryptocurrency mining processor CMP. Last quarter, sales of this product generated revenue of $155 million, or nearly half of the OEM and IP category's total revenue. Second, the company is making its new GeForce RTX GPUs less appealing to cryptocurrency miners by lowering their mining performance capabilities.

Kress attributed the data center's year-over-year increase to the Mellanox acquisition along with the ramp up of products based on Ampere.

Update on pending Arm acquisition

On the earnings call, investors can expect management to provide an update on the company's pending $40 billion acquisition of leading chip designer Arm, owned by Japan's SoftBank. This big deal was announced in September 2020, and has been facing some regulatory headwinds.

Fiscal Q3 2022 guidance

The market's reaction to Nvidia's upcoming report will probably hinge heavily on the company's outlook for the fiscal third quarter, relative to Wall Street's expectations.

For fiscal Q3, analysts are modeling for adjusted EPS of $1.04 on revenue of $6.53 billion, representing year-over-year growth of 42% and 38%, respectively. 

Beth McKenna owns shares of Nvidia. The Motley Fool owns shares of and recommends Nvidia. The Motley Fool has a disclosure policy.

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