Investors will be taking a fresh look at Nvidia’s artificial intelligence chip sales.
NVIDIA (NVDA 1.46%) is at the epicenter of the artificial intelligence (AI) revolution. The company designs the most powerful data center chips for AI development, and demand continues to outstrip supply, leading to a surge in the company’s revenue and profits.
After the close of trading today, approximately 5:00 PM Eastern Time/2:00 PM Pacific Time, NVIDIA will report financial results for the second quarter of fiscal year 2025 (ending July 31). The earnings report will give investors a new perspective on the semiconductor giant’s revenue and outlook for the remainder of the year.
Here’s what you need to know:
Image credit: Nvidia.
Wall Street expects more eye-watering earnings
Nvidia’s official guidance calls for total revenue of $28 billion in the second quarter, representing 107% growth over the same period last year, though that may be a conservative figure as Wall Street consensus estimates have risen steadily in recent months and now stand at $28.7 billion (according to LSEG).
Considering Nvidia generated $26 billion in revenue in the first quarter (ended April 28), $2 billion more than the company had originally forecast, it’s no wonder analysts expect second-quarter results to beat expectations.
The data center division accounted for $22.6 billion of Nvidia’s total revenue in the first quarter. Nvidia’s graphics processors (GPUs) for data centers are crucial to AI development, so this number will be in focus in the second quarter report. Wall Street says the figure could be between $24.5 billion and $25.2 billion, and results above the top end of that range could spark a new wave of enthusiasm for Nvidia shares.
Big tech companies including Microsoft, Alphabet and Meta Platforms have each committed to spending tens of billions of dollars on AI datacenter infrastructure this year, and a significant amount of that money will flow directly to Nvidia through GPU sales.
That includes sales of its H100 GPU, which set the industry benchmark last year, and its latest H200, which can run AI inference twice as fast as the previous generation. But there’s also an entirely new generation of chips on the way.
Expect updates on Nvidia’s new Blackwell chips
Earlier this year, Nvidia unveiled a new GPU architecture called Blackwell, designed to handle trillion-parameter large-scale language models (LLMs), the kind of things that have so far only been developed by big AI companies like OpenAI.
Blackwell-based GPUs will deliver significantly higher performance than traditional GPUs and will also be significantly more energy efficient, Nvidia said. For example, the new DGX B200 system combines eight Blackwell B200 GPUs, enabling AI models to be trained three times faster. Runs AI inference 15x faster than the previous DGX H100 system.
Nvidia CEO Jensen Huang said the B200 GPUs will be priced at around $30,000 to $40,000, roughly what many customers paid for the H100 GPUs. In other words, given the significant performance benefits, Blackwell will make it much more cost-effective for businesses to access and deploy cutting-edge AI models.
According to Huang’s comments in May, Nvidia was supposed to start shipping Blackwell GPUs to customers in the second quarter, leading to increased sales as the year progressed, but a recent report from The Information said the three-month delay could be due to technical issues with the next-generation chips.
While NVIDIA has not acknowledged the rumored delay, investors should listen closely to its comments regarding Blackwell’s revenue in the second quarter and updated guidance for the remainder of fiscal 2025. Huang previously said he expects Blackwell’s revenue to grow “significantly” this year, so any changes to the company’s timeline could have a significant impact on future financial results.
Here’s how Nvidia’s stock price might react
Since the start of 2023, when the AI boom really started to pick up steam, NVIDIA shares have risen 765%. The company is now a $3.1 trillion company, meaning even a small movement in its stock price could increase its valuation by billions of dollars.
While stock price movements on any given day are mostly just noise, Nvidia reported its first-quarter earnings after the close of trading on May 22, and its shares rose 9.3% the next day. Remember, the company beat revenue expectations by $2 billion at the time, so a similar result this time around could see its shares rise by a similar amount.
That said, following a sharp market correction earlier this month, Nvidia shares are currently trading 7% below their all-time high, and the stock could fall even more sharply if the company reports weaker-than-expected earnings.
But for investors looking several years ahead, Nvidia shares look cheap right now. Wall Street expects the company to earn $0.64 per share in the second quarter, which would put its trailing-12-month earnings at $2.17. That gives the company a price-to-earnings (P/E) ratio of 58.3.
That’s nearly double the price of the Nasdaq 100 Index, which trades at 32 times earnings, but looking forward, the picture is very different: Analysts expect Nvidia to generate $3.81 per share in earnings in fiscal 2026, putting the stock at a more reasonable multiple of 33.2 times earnings.
In other words, unless Nvidia’s second-quarter report produces any negative surprises, the company’s shares look like a bargain at current prices for investors who can hang on to them for at least the next two years.
Randi Zuckerberg is a former director of market development and spokeswoman for Facebook and the sister of Meta Platforms CEO Mark Zuckerberg. She is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Anthony DiPizio has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet, Meta Platforms, Microsoft, and NVIDIA. The Motley Fool recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
