Nvidia's (NVDA +4.30%) steep sell-off has nearly run its course. The stock plunged 23.5% at one point, causing considerable angst for some investors. However, Nvidia has been on a roll in August, jumping almost 25%.
This momentum will end anytime soon, in my view. Instead, I predict that Nvidia stock will soar after Aug. 28. And I think the surge will be due to three key factors.
NASDAQ: NVDA
Key Data Points
1. Blowout Q2 numbers
In Nvidia's fiscal 2025 first quarter, the company said it expected Q2 revenue of "$28.0 billion, plus or minus 2%." Wall Street analysts surveyed by LSEG believe Nvidia sandbagged a little. Their average Q2 revenue estimate is $28.6 billion.
I predict Nvidia will beat its own Q2 outlook and top Wall Street's expectations when it announces its results on Aug. 28. I also think this will flow down to the bottom line, with the company exceeding the average analysts' adjusted earnings estimate of $0.64 per share.
Why am I so optimistic? Both Nvidia and Wall Street have been too pessimistic about the demand for the company's graphics processing units (GPUs).
In Nvidia's fiscal 2024 Q4 update, management projected fiscal 2025 Q1 revenue of $24 billion, again giving a "plus or minus 2%" caveat. The company's actual Q1 revenue was $26 billion -- 8.3% higher than its outlook. Nvidia beat the consensus Q1 earnings estimate by 9.8%. I won't be surprised if there are similar outcomes in the company's Q2 results.
2. Stellar guidance
On a related note, I look for Nvidia to once again provide stellar guidance for the next quarter in its Q2 update. I'm even more confident about this prediction than I am that the company will deliver blowout Q2 numbers.
Four reasons explain my boldness: Alphabet, Amazon, Microsoft, and Meta Platforms. All of these huge Nvidia customers indicated in their latest quarterly updates that their capital expenditures will likely increase in the coming quarters to expand their artificial intelligence (AI) infrastructure.
One comment especially stood out to me in the tech giants' recent earnings calls. Alphabet CEO Sundar Pichai said, "[T]he risk of under-investing is dramatically greater than the risk of over-investing for us here." That should be music to the ears of Nvidia shareholders. And if Alphabet sees this risk of under-investing, you can bet that Amazon, Microsoft, and Meta do too.
3. Clarity on the Blackwell launch
Perhaps the darkest cloud hovering over Nvidia in recent weeks is the concern that the company's launch of its new Blackwell GPUs will be significantly delayed. Any pushback in shipping these new chips will mean Nvidia's revenue won't grow as quickly as originally expected.
I think the biggest issue for investors here is the sheer uncertainty. Some could be afraid of a much more serious delay than has been speculated so far. But the cure for uncertainty is clarity, something I expect Nvidia will provide in its Q2 conference call.
Am I predicting there won't be any delay in shipping Blackwell chips? No. However, I suspect that Nvidia will seek to calm concerns to the best of its ability (and probably hint a lot about the pent-up demand for the new architecture). Once investors digest the news (whatever it might be), they'll quickly adjust their expectations. Most importantly, any delay will only be temporary.
