Nvidia (NASDAQ: $NVDA), the third most valuable company globally, reported earnings for Q2 fiscal 2025 on Wednesday after markets closed, beating analysts’ expectations.
Nvidia Beat Earnings Estimates In Q2
Chipmaker Nvidia, which is riding the AI investment wave by big tech, beat Wall Street estimates with revenue of $30.04 billion in the second quarter. Revenue was 15% higher than Q1 and 122% higher than a year ago. It was also above estimates of $28.7 billion.
Earnings came in at $0.68 per share, beating expectations of $0.64. The reported adjusted EPS was an 11% increase from the last quarter and a massive 152% increase year over year. The results highlight rising demand for AI, which shows no signs of slowing down.
CEO Forecasts Growth
During the earnings call, Jense Huang, the Nvidia CEO said that the company was set to ship many more chips and hardware in 2025 that the combined total of the last 31 years. He added that, “Hopper demand remains strong, and the anticipation for Blackwell is incredible.”
Nvidia Stock Performance
Nvidia had a stellar performance in 2023, rising 160.76% year to date and 157.50% in the past 12 months. Its stellar rise has pushed the S&P 500 up 17.91% this year alone and 24.34% in the past 12 months.
Despite the huge gains thus far, analysts remain optimistic about the stock’s future. They forecast a 19.66% upside for the stock to $150.31 from the current price of $125.61 per share. Analysts forecast a wide range for the stock, with a high of $200 and a low of $100.
Despite the earnings and revenue beat, Nvidia stock traded downward during pre-market hours. One reason for this is that analysts were expecting a bigger beat.
Upbeat Outlook
For the third quarter of fiscal 2025, Nvidia expects revenue of $32.5 billion, with a 2% margin of error. GAAP and non-GAAP gross margins are forecast to be 74.4% and 75%, respectively, with a 50 basis points margin on error.
For fiscal 2025, the GAAP and non-GAAP operating expenses are forecast at $4.3 billion to $3.0 billion, respectively, while full-year operating expenses are forecast to increase up to 40%.
NVDA Could Surge $300 Billion
According to data from ORATS, options traders anticipate the stock to rise by around 9.8%, which could represent a $305 billion increase in the market cap. The stock’s high volatility, nearly double that of other trillion-dollar companies, reflects continued uncertainty regarding the future of AI.
ORATS’ report is based on the stock’s historical performance in the past three years, immediately after the Q2 results. In the past, the stock has moved an average of 8.1% post-earnings.
Nvidia’s results are important for gauging the performance of the entire AI industry. Its strong Q2 results signal that AI adoption is strong across numerous sectors.
Could Nvidia Be The Next Apple?
The AI boom has spurred a surge in Nvidia’s stock, placing it firmly above the $3 trillion market cap. It has cornered the AI market and is now about AI chip rivals Intel and ADM. The surge in AI chip demand has pushed Nvidia’s stock up from $360 billion at the start of 2023 to over $3 trillion.
The surge in stock price has pushed Nvidia into the second-most valuable company globally, just behind Apple (AAPL). Since 2014, Nvidia has outpaced Apple in several key areas, even before the start of the AI boom.
Its free cash flow of $39 billion is significantly lower than Apple’s $104 billion. However, it has been up 125% in the past 12 months, while Apple’s has risen 5% in the same period. Eventually, it could outpace Apple.
Another key area is market share. Apple currently holds 15% of the global smartphone market but is coming under increased competition from Chinese companies like OPPO and Xiaomi. In contrast, Nvidia controls nearly 90% of the AI chip market.
The AI chip market is also in a phase of rapid expansion, with demand for AI processing power rising daily. In contrast, the smartphone market is highly mature, with little room for growth. All these factors combined, according to analysts, point to Nvidia potentially surpassing Apple’s market cap by 2030.
Is Nvidia A Buy After The Earnings Beat?
While expectations are high, Nvidia’s future could depend on several key factors. These include competition from AMD and Intel, potential regulatory challenges in China, the pace of AI adoption in various industries, and innovation from Nvidia, including the upcoming Blackwell platform that combines software and hardware.
Amid the AI revolution, Nvidia’s results will continue to set the tone for the sector in the next few years. Based on its triple digit growth in recent quarters, and results signaling rising AI adoption, adding NVDA to your portfolio could potentially yield positive results.
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