Nvidia to report Q2 earnings amid Wall Street’s sky-high expectations

Nvidia (NVDA) will report its second quarter earnings after the bell today in what will prove to be a key test for the AI mania that has swept through the market throughout the first half of the year.

Expectations are sky high for Nvidia. In May, the company smashed Wall Street’s second quarter revenue guidance expectations of $7.2 billion, saying it anticipated revenue of $11 billion, plus or minus 2%.

While Nvidia stock has already rocketed 212% year to date, analysts continue to make bullish calls on the company, raising price targets to $500 and higher. Baird’s Tristan Gerra raised that firm’s target as high as $570. (Nvidia’s shares were trading around $464 Wednesday morning.)

Here’s what Wall Street expects of Nvidia in the quarter, per data from Bloomberg, versus how it performed in the same quarter last year.

• Revenue: $11.04 billion expected versus $6.70 billion in Q2 last year.

• Adjusted EPS: $2.07 expected versus $0.52 in Q2 last year.

• Data center revenue: $7.98 billion expected versus $3.81 billion in Q2 last year.

• Gaming revenue: $2.38 billion expected versus $2.04 billion in Q2 last year.

The AI craze kicked into high gear in November 2022 when OpenAI debuted its generative AI app, ChatGPT. While artificial intelligence has been around for some time, ChatGPT’s popularity as one of the fastest-growing apps in history put the technology firmly on Wall Street’s radar.

Since then, tech companies ranging from giants ranging from Microsoft (MSFT), Google (GOOG, GOOGL), and Meta (META) to smaller firms have debuted or announced that they’re working on their own generative AI tools and software.

Nvidia, which has been investing in its AI capabilities for years, is helping to power those products.

But Nvidia’s success could also prove problematic. The rapid increase in demand for its chips is putting pressure on supplier TSMC to produce as many graphics processors as possible. But the company might not be able to keep up, which could put a strain on Nvidia’s revenue.

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Despite that, expectations for the chip giant continue to soar on Wall Street. Analysts anticipate Nvidia will bring in a whopping $12.51 billion in revenue for the upcoming quarter. That’s an enormous jump from the same time last year when revenue came in at $5.93 billion.

Part of the reason for that difference is that Nvidia’s gaming revenue fell 51% year over year in Q3 2022. But even if that segment continues to rebound, as it is expected to this quarter, it would still mean an enormous leap in overall revenue.

If Nvidia misses expectations, though, it could mean a pullback in the overall AI hype cycle. That said, it certainly wouldn’t be a death knell for AI.

Daniel Howley is the tech editor at Yahoo Finance. He’s been covering the tech industry since 2011. You can follow him on Twitter @DanielHowley.

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