To The Moon

$NVIDIA(NVDA)$ is scheduled to release its fiscal Q1 2026 earnings after market close on Wednesday, 28 May 2025.

From the recent Computex and also comment from Tesla CEO Musk, there is a potential that Nvidia might enjoy and increase in order due to the AI demand and also innovation boost. I am holding a long position on Nvidia.

Here are the key expectations for Q1 FY 2026.

Revenue: Analysts generally expect NVIDIA to report revenue around $43.0 billion, which would represent a significant year-over-year improvement of approximately 65%. This aligns with the company's own guidance range.

Earnings Per Share (EPS): The consensus EPS forecast is around $0.82 to $0.89 per share, which would indicate a substantial increase (around 41-46%) from the $0.58 reported in the year-ago quarter.

Data Center Growth: The data center segment is expected to remain the primary driver of revenue growth, fueled by the accelerating demand for AI and cloud computing solutions. NVIDIA's leadership in AI hardware, particularly with its Blackwell architecture and GB200 systems, is critical to this growth.

Gross Margin: NVIDIA's outlook for Q1 FY 2026 includes GAAP and non-GAAP gross margins of approximately 70.6% and 71.0%, respectively, plus or minus 50 basis points.

Nvidia (NVDA) Last Positive Earnings Saw Share Price Gain 3.28%

Nvidia had a positive earnings call on 26 Feb 2025 which saw its share price gained 328% since.

The earnings call highlighted NVIDIA's record-breaking revenue and strong growth in data center and automotive segments. However, challenges remain in the gaming and networking sectors, and the company faces margin pressures during the Blackwell ramp. The positive aspects of revenue growth and successful product launches outweigh the lowlights, indicating a generally positive outlook.

Nvidia (NVDA) Guidance

During NVIDIA's fourth-quarter earnings call for fiscal 2025, Colette Kress provided guidance highlighting robust financial performance and future expectations. Q4 revenue reached a record $39.3 billion, up 12% sequentially and 78% year-on-year, exceeding the forecast of $37.5 billion. The full-year revenue for fiscal 2025 was $130.5 billion, a 114% increase from the previous year. Data center revenue was a significant contributor, with fiscal 2025 revenue totaling $115.2 billion, more than doubling from the prior year.

The Blackwell architecture played a crucial role in this growth, generating $11 billion in Q4 alone, marking the fastest product ramp in NVIDIA's history. Looking ahead, NVIDIA expects Q1 fiscal 2026 revenue to be approximately $43 billion, with GAAP and non-GAAP gross margins projected at 70.6% and 71%, respectively. The company anticipates continued strong demand for its Blackwell architecture, which is expected to drive sequential growth in both data center and gaming sectors.

Things to Watch Out For Q1 2026

Revenue of $39.3 billion was up 12% sequentially and up 78% year-on-year, exceeding the outlook of $37.5 billion. Gaming revenue of $2.5 billion decreased 22% sequentially and 11% year-on-year, impacted by supply constraints. Networking revenue declined 3% sequentially, despite robust attachment to GPU compute systems.

Guidance for Q2 FY2026: Investors will be particularly focused on NVIDIA's guidance for the fiscal Q2 2026. Analysts are looking for total revenue guidance around $46.4 billion. A forecast below this figure could potentially trigger a sell-off, as it might signal a slowdown in AI spending by some customers due to economic uncertainties or increased competition.

Total revenue for the first quarter of fiscal 2026 is expected to be $43 billion, with continued strong demand for Blackwell.

China Demand: A surge in orders from Chinese clients could help NVIDIA exceed revenue expectations, especially given the significant revenue NVIDIA generated from China in the previous fiscal year.

Data center sales in China remained well below previous levels due to export controls, with shipments expected to remain at current percentages.

Blackwell Production and Supply Chain: Updates on the production ramp-up of the Blackwell architecture and any improvements in supply chain efficiency and yield will be important.

Blackwell sales exceeded expectations with $11 billion in revenue and marked the fastest product ramp in the company's history.

Competition and Market Diversification: While data centers currently dominate revenue, progress in other segments like automotive, healthcare, and robotics could indicate new avenues for growth and help diversify revenue streams. Competition from other AI chip developers will also be a key consideration.

Data center revenue for fiscal 2025 was $115.2 billion, more than doubling from the prior year. Fourth-quarter data center revenue was a record $35.6 billion, up 16% sequentially and 93% year-on-year.

Automotive revenue was a record $570 million, up 27% sequentially and up 103% year-on-year, driven by autonomous vehicles and partnerships with companies like Toyota and Aurora.

GAAP gross margins were 73%, and non-GAAP were 73.5%, down sequentially with expectations to remain in the low seventies during Blackwell ramp.

Stock Performance and Valuation: NVIDIA's stock has seen significant rallies, outpacing broader market indices. Analysts will be assessing whether the strong growth trajectory justifies current valuations and forward P/E ratios.

Revenue of $511 million was up 5% sequentially and 10% year-on-year, with full-year revenue of $1.9 billion increasing 21% year-on-year.

Why a Surprise Surge is Possible

Nvidia's earnings report on 28 May 2025 (Q1 Fiscal Year 2026) certainly has the potential to cause a "surprise surge" in its stock, although it is not a guaranteed outcome.

Continued AI Demand: The demand for Nvidia's AI chips, particularly the new Blackwell architecture, remains incredibly strong. CEO Jensen Huang has described demand as "insane," and the Blackwell GB200 GPU has already seen a rapid ramp-up in sales, exceeding internal estimates. If Nvidia can demonstrate continued robust demand and successful production scaling of its advanced AI chips, especially the Blackwell line, it could lead to another positive surprise.

Beating High Expectations: Wall Street has very high expectations for Nvidia, with revenue projected to reach around $43 billion for Q1 FY26 (a significant year-over-year increase). Earnings per share (EPS) are also expected to rise considerably. If Nvidia can not only meet but significantly exceed these already elevated expectations, it could trigger a surge. The company has a history of outperforming consensus estimates.

Strong Guidance: Beyond the current quarter's results, the company's outlook (guidance) for future quarters is crucial. If Nvidia provides an even more optimistic forecast for revenue and earnings, indicating sustained or accelerated growth in the AI market, this could ignite investor confidence and push the stock higher.

Blackwell Architecture Details: Investors will be keen to hear more about the production capacity, shipping dates, and customer adoption rates for the Blackwell chips. Any positive updates or clarity on these aspects could be a strong catalyst.

Positive Market Sentiment: While there have been some recent market concerns around tariffs and economic uncertainty, overall sentiment towards AI stocks and Nvidia has been largely positive. If broader market conditions remain healthy and investor confidence in the AI revolution stays high, it could amplify a positive earnings reaction.

Valuation: Some analysts currently view Nvidia's stock as trading at a discount compared to its historical price-to-earnings (P/E) ratios, especially when considering its impressive growth prospects. If the earnings report reinforces the strong growth narrative, this "discount" could be seen as an opportunity, leading to a re-rating and a surge.

Factors That Could Limit a Surge or Cause a Dip

Already High Expectations: The flip side of high expectations is that merely meeting them might not be enough to satisfy investors. If Nvidia only meets consensus forecasts without a substantial beat or exceptionally strong guidance, the stock could see a flat or even negative reaction due to "buy the rumor, sell the news" behavior.

Production or Supply Chain Concerns: Any hint of production setbacks, supply chain constraints, or delays in the Blackwell rollout could temper enthusiasm and negatively impact the stock.

Regulatory Risks/China: Ongoing concerns about export restrictions to China and geopolitical tensions could weigh on investor sentiment, as China is a significant market for Nvidia. Any new developments or negative commentary on this front could be a headwind.

Competition: While Nvidia is a dominant player, increased competition in the AI chip space could become a concern, although currently, Nvidia's lead is substantial.

Profit-Taking: Given Nvidia's substantial gains over the past year, some investors might take profits after the earnings report, even if the results are good, which could limit the upside.

Nvidia (NVDA) Price Target

Based on 51 analysts from Tiger Brokers offering 12 month price targets for Nvidia in the last 3 months. The average price target is $163.77 with a high forecast of $235.92 and a low forecast of $100.00. The average price target represents a 24.26% change from the last price of $131.80

Nvidia's stock has often shown significant volatility around earnings reports, with both substantial surges and dips. For example, its Q4 FY24 earnings (reported in Feb 2024) saw a 16.4% surge, while some previous reports have led to smaller moves or even slight declines.

Technical Analysis - Exponential Moving Average (EMA)

Nvidia's stock has often shown significant volatility around earnings reports, with both substantial surges and dips. For example, its Q4 FY24 earnings (reported in Feb 2024) saw a 16.4% surge, while some previous reports have led to smaller moves or even slight declines.

We are seeing a potential bullish crossover forming with the 50-day period crossing above 200-day period, and Nvidia bulls are in control on the daily, with positive momentum present though recent days have Nvidia trading sideways, hovering around the $130 to $132 range.

I am expecting a significant surge after its earnings result as there should be pretty good sales figure ahead of the chips tariffs and restriction in Q1 2026, this could continue as demand for AI looks to continue into the other quarters.

NVDA Straddle Index (30-Day Maturity, ATM)

The implied straddle for the upcoming 28 May 2025 earnings suggests an expected move of around 8.5% in either direction, indicating high anticipated volatility.

NVDA Straddle Index (30-Day Maturity, ATM) has increased by 0.5% today to a value of 9.7% premium to stock price. The current premium is equal to its 52-week average of 9.6%.

The NVDA Straddle Index is designed to track the theoretical cost of buying an at-the-money call and at-the-money put for options with 30 days to maturity. The theoretical cost is converted to premium as a percentage of the stock price.

Summary

The general sentiment among analysts for NVIDIA remains highly bullish, with a strong majority recommending "Strong Buy." The continued demand for AI infrastructure is expected to be a powerful tailwind for NVIDIA's financial performance.

But we need to also watch out for any signs of slowing demand or increased competition that could impact future growth.

Appreciate if you could share your thoughts in the comment section whether you think Nvidia could provide a surprise earnings with more sales due to the tariffs and a much positive guidance for Q2 2026.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.