Nvidia Q1 Earnings Preview: Data Center, Gaming Inventory In Focus Amid Fundamental Uncertainties

NVIDIA Corporation NVDA is the last of the major chipmakers to report its quarterly results this earnings season. Following Intel Corporation INTC's recent guidance update that didn't go well with the market, all eyes will be on Nvidia when it reports quarterly results after Thursday's market close.

Key Numbers

Analysts are expecting first-quarter earnings of 79 cents per share on revenue of $2.2 billion.

Back in January, Nvidia in pre-announced a revenue shortfall for its fourth quarter but managed to beat the lowered bar.

Among rivals, Intel had a forgettable first quarter, reporting a sharp drop in data center revenues and lowering its full-year guidance. Advanced Micro Devices, Inc. AMD fared better with convincing beats.

Nvidia's quarterly results could reflect the end-market weakness, especially amid the escalation of the trade war with China, and soft graphics chip demand, according to analysts.

Key Events During The Quarter

In March, Nvidia announced a deal to buy Israeli computer networking products company Mellanox Technologies, Ltd MLNX for $6.9 billion.

The company held its investor day in conjunction with its GTC Developers conference, wherein it said excess gaming inventory is on track to be cleared by the first quarter and that the pause in data center revenue is only transitory. Nvidia also expressed optimism about the data science market, which it said is likely to be a larger market opportunity than AI training.

"While we remain positive on NVDA's longer-term prospects, we await better visibility into [second half] recovery ahead of taking a more constructive stance on shares," MKM Partners analyst Reuben Roy said following the investor day.

Stock Performance

After a small upward bounce following the fourth-quarter results on Feb. 14, Nvidia's shares were range-bound around the $150 level. The stock took off on March 11 following the announcement concerning the Mellanox deal. Subsequently, Nvidia rallied to a high of $193.47 on April 11 and then began a consolidation move.

The stock has been giving back some ground, trading around $159.86 per share at time of publication.

Related Links:

Big Chip Q1 Preview: A Focus On Industry Downturn, Product Delays, Competitive Dynamics, New Tech

As Intel Falls After Q1 Report, Analysts Recommend Buying The Dip