Nvidia (NVDA +2.33%) is slated to report its second-quarter results for fiscal 2023 (the May to July 2022 period) after the market closes on Wednesday, Aug. 24. An analyst conference call is scheduled for the same day at 5 p.m. ET.
Investors will probably be approaching the technology giant's report with cautious optimism. On the positive side, last quarter, investors drove the stock up 5.2% after the company beat Wall Street's consensus estimates for both revenue and earnings. That marked at least the eighth consecutive quarter that the company has topped analysts' earnings projection.
However, Nvidia's second-quarter guidance for both the top and bottom lines came in lower than analysts had been expecting. Management was likely being more conservative than usual given the challenging macroeconomic environment. The current global environment is characterized by high inflation, slowing economic growth, and supply chain bottlenecks stemming mainly from the pandemic.
Long-term investors should focus on how well Nvidia seems to be setting itself up for long-term growth.
Here's what to watch in the company's Q2 report.
Image source: Getty Images.
Nvidia's key numbers
Here are benchmarks to use to gauge the tech company's results.
| Metric | Fiscal Q2 2022 Result | Nvidia's Fiscal Q2 2023 Guidance | Wall Street's Fiscal Q2 2023 Consensus Estimate | Wall Street's Projected Change |
|---|---|---|---|---|
| Revenue | $6.51 billion | $8.10 billion | $8.10 billion | 24% |
| Adjusted earnings per share (EPS) | $1.04 | $1.27* | $1.26 | 21% |
Data sources: Nvidia and Yahoo! Finance. Fiscal Q2 2023 covers the May-through-July 2022 period. *Calculated by the author based on the metrics for which management provides guidance.
For context, last quarter, Nvidia's revenue jumped 46% year over year (and 8% sequentially) to a record $8.29 billion. Growth was driven by record revenue in the gaming and data center platforms. EPS on the basis of generally accepted accounting principles (GAAP) declined 16% year over year to $0.64, which includes an after-tax charge of $0.52 related to the termination of the Arm acquisition deal. EPS adjusted for one-time items -- which is the earnings metric investors should focus on -- surged 49% to $1.36.
Wall Street had been looking for revenue and adjusted EPS of $8.12 billion and $1.29, respectively, so Nvidia comfortably exceeded both expectations.
NASDAQ: NVDA
Key Data Points
Platform performance
Here's how the platforms performed last quarter:
| Platform | Fiscal Q1 2023 Result | Change (YOY) | Change (QOQ) |
|---|---|---|---|
| Data center | $3.75 billion | 83% | 15% |
| Gaming | $3.62 billion | 31% | 6% |
| Professional visualization | $622 million | 67% | (3%) |
| Automotive and robotics | $138 million | (10%) | 10% |
| OEM and other | $158 million | (52%) | (18%) |
| Total | $8.29 billion | 46% | 8% |
Data source: Nvidia. OEM = original equipment manufacturer; not a target market. YOY = year over year. QOQ = quarter over quarter.
Investors should continue to focus on the two largest platforms since they drive overall company performance. Last quarter, data center and gaming combined accounted for nearly 89% of the company's total revenue.
On the earnings call, management will surely discuss progress with the Omniverse, Nvidia's platform for enabling companies to build their metaverses.
Results in the OEM and other category will be volatile. This category includes sales of the company's cryptocurrency mining processor (CMP), which will fluctuate along with the cryptocurrency market.
Third-quarter guidance
Guidance that's notably different from what Wall Street is expecting will likely move Nvidia stock. For the fiscal third quarter (the August through October period), analysts are currently modeling for adjusted EPS of $1.33 on revenue of $8.38 billion. These results would represent year-over-year growth of 14% and 18%, respectively.
"We are gearing up for the largest wave of new products in our history with new GPU [graphics processing unit], CPU [central processing unit], DPU [data processing unit], and robotics processors ramping in the second half" of the fiscal year, CEO Jensen Huang said in last quarter's earnings release. Investors can expect this topic to be discussed on the upcoming second-quarter earnings call.
As Huang is quoted as saying in a Nvidia blog, "The CPU is for general-purpose computing, the GPU is for accelerated computing, and the DPU, which moves data around the data center, does data processing."
