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Time to Buy Nvidia's Stock as Q1 Earnings Approach Next Week?

Investors are highly anticipating Q1 earnings from Nvidia NVDA next week with the broader indexes printing fresh highs fueled by reassuring inflationary data in April.

Another quarter of monstrous growth from Nvidia could certainly propel markets higher so let’s see if it’s time to buy stock in the chip giant ahead of its Q1 results on Wednesday, May 22.

Zacks Investment Research
Zacks Investment Research


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Lofty Q1 Expectations

The acceleration of Nvidia’s growth and demand for its artificial intelligence chips is thought to have continued with Q1 EPS projected to soar over 400% to $5.52 versus $1.09 a share in the comparative quarter. Furthermore, the Zacks ESP (Expected Surprise Prediction) indicates Nvidia could once again surpass earnings expectations with the Most Accurate Estimate having Q1 EPS slated at $5.68 and 3% above the current Zacks Consensus.

Zacks Investment Research
Zacks Investment Research


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Nvidia most recently beat the Zacks Consensus by 13% in February with Q4 EPS at $5.16 compared to estimates of $4.55 a share. Notably, Nvidia has surpassed earnings expectations for five straight quarters posting an average earnings surprise of 20.18% in its last four quarterly reports.

On the top line, Q1 sales are expected to increase 237% to $24.27 billion versus $7.19 billion a year ago. More impressive, Nvidia has surpassed sales estimates for 20 consecutive quarters.

Zacks Investment Research
Zacks Investment Research


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Blackwell GPU & Outlook

Wallstreet will be looking for updates on Nvidia’s Blackwell series of GPUs which the company says will be the highest-performance AI chips on the market ahead of its current H200 series and AMD’s AMD MI300 series. As of now, models for the Blackwell series are expected to arrive during Q4 in October or November. With a projectied price tag of $30,000-$40,000 for a single GPU, the release should start to cement projections of high double-digit top and bottom-line growth for Nvidia in its current fiscal 2025 and FY26.

Zacks Investment Research
Zacks Investment Research


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Checking Nvidia’s P/E Valuation

Attributed to its growth, Nvidia’s stock has traded at a far more reasonable valuation and currently carries a 39.4X forward earnings multiple which is well below its five-year high of 122.1X and a 29% discount to the median of 55.6X.

Nvidia's stock also trades beneath its Zacks Semiconductor-General Industry average of 43.7X and AMD’s 47.5X.

Zacks Investment Research
Zacks Investment Research


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Bottom Line 

Nvidia’s stock currently sports a Zacks Rank #1 (Strong Buy) ahead of its Q1 report next week. This is attributed to Nvidia’s more reasonable P/E valuation and the fact that earnings estimate revisions have continued to rise for both its FY25 and FY26.

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