Nvidia Earnings: What to Watch on Feb. 16

In the tech giant's fiscal fourth-quarter report, investors should focus on results in the gaming and data center businesses and guidance.

By Beth McKenna – Jan 26, 2022 at 6:10PM EST

Key Points

Wall Street expects fiscal Q4 revenue to jump 48% year over year.
Analysts also project quarterly adjusted EPS will surge 58%.
The metaverse and pending Arm acquisition are likely to be key topics on the earnings call.

Nvidia (NVDA 1.25%) is slated to report its fourth-quarter and full-year results for fiscal 2022 (essentially the November 2021 through January 2022 period) after the market close on Wednesday, Feb. 16. An analyst conference call is scheduled for the same day at 5:30 p.m. ET.

Investors in the graphics chip specialist will probably be approaching the report with optimism. The company has beaten Wall Street's consensus earnings estimate in at least the past six consecutive quarters. In addition, investors will be eager to hear what management has to say on the earnings call about the Omniverse, which is Nvidia's platform for enabling companies to build out their metaverses.

Investors shouldn't be concerned if management shares that the company is abandoning its attempt to acquire leading mobile-chip designer Arm, owned by Japan's SoftBank. On Jan. 25, news reports began rolling out saying that Nvidia is poised to give up pursuing this proposed deal, which has run into brisk regulatory headwinds. Nvidia doesn't need Arm for the company and its stock to continue to be long-term winners, as I've been writing for a couple of quarters.

Nvidia stock has returned 69.6% over the one-year period through Jan. 26, easily outpacing the S&P 500's return of 14.5% over this period.

Here's what to watch in the company's upcoming report.

Rendering of a human head overlaid with various data and technology icons.

Image source: Getty Images.

Nvidia's key quarterly numbers

Here are benchmarks to use to gauge the tech company's results.

Metric	Fiscal Q4 2021 Result	Nvidia's Fiscal Q4 2022 Guidance	Wall Street's Fiscal Q4 2022 Consensus Estimate	Wall Street's Projected Growth
Revenue	$5.00 billion	$7.40 billion	$7.42 billion	48%
Adjusted earnings per share (EPS)	$0.77*	$1.22**	$1.22	58%

Data sources: Nvidia and Yahoo! Finance. Fiscal Q4 2022 essentially corresponds with the November 2021 through January 2022 period. *Adjusted to reflect 4-for-1 stock split in July 2021, which increased share count by a factor of four. **Calculated by the author based on the metrics for which management provides guidance.

For context, in fiscal Q3, Nvidia's revenue jumped 50% year over year (and 9% sequentially) to a record $7.10 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 83% year over year to $0.97, and adjusted EPS surged 60% to $1.17.

Wall Street had been looking for fiscal Q3 revenue and adjusted EPS of $6.82 billion and $1.11, respectively, so Nvidia surpassed both expectations.

Platform performance

Here's how the platforms performed last quarter:

Platform	Fiscal Q3 2022 Revenue	Change (YOY)	Change (QOQ)
Gaming	$3.22 billion	42%	5%
Data center	$2.94 billion	55%	24%
Professional visualization	$577 million	144%	11%
Automotive	$135 million	8%	(11%)
OEM and other	$234 million	21%	(43%)
Total	$7.10 billion	50%	9%

Data source: Nvidia. OEM = original equipment manufacturer; not a target market platform. YOY = year over year. QOQ = quarter over quarter.

As always, investors should focus on the two largest platforms. Nvidia's overall results are driven by results in its gaming and data center businesses. In the first, second, and third quarters of fiscal 2022, these two platforms together accounted for 85%, 83%, and 87%, respectively, of the company's total revenue.

Don't sweat the results of the OEM and other category

In recent quarters, a contributor to Nvidia's OEM category has been sales of its cryptocurrency mining processor (CMP), which launched in early calendar year 2021. Reiterating what I wrote in last quarter's earnings preview, investors shouldn't pay much attention to results in OEM and other because this category's sales can be expected to fluctuate considerably due to the extreme volatility in the cryptocurrency market.

Putting some numbers next to the prior statement, last quarter, sales of the CMP added $105 million to Nvidia's coffers, down from $266 million in the prior quarter. And on last quarter's earnings call, CFO Colette Kress said, "We also expect our CMP product to decline quarter-on-quarter to very negligible levels in Q4."

But pay attention to the discussion about the metaverse

Nvidia's quarterly earnings calls (and its earnings releases, for that matter) put those of most other companies to shame, so I highly recommend that investors listen to these calls. It's a sure thing that the top management team will discuss the Omniverse, Nvidia's platform for enabling companies to build their metaverses.

Guidance

Management's guidance, relative to Wall Street's expectations, will likely be the biggest factor in the market's reaction to Nvidia's upcoming report.

So investors should know that for the first quarter of fiscal 2023 (essentially the February to April 2022 period), analysts are currently modeling for adjusted EPS of $1.17 on revenue of $7.28 billion, representing year-over-year growth of 29% and 29%, respectively.