NVIDIA's quarterly report is coming! This time, will there be any surprises?

Wall Street is generally optimistic about NVIDIA's performance in the first quarter, expecting its data center business to continue its high growth trend driven by the wave of generative artificial intelligence, with first-quarter revenue growth potentially reaching 4 times year-on-year.

NVIDIA will announce its financial results for the first quarter of fiscal year 2025 (ending April 28, 2024) on Thursday (May 23) Beijing time, and will hold an earnings conference call at 05:00 on the same day.

Analysts' consensus expectations are that NVIDIA's total revenue for the first quarter is $24.69 billion, a year-on-year increase of 243.3%; Earnings Before Interest and Taxes (EBIT) is expected to increase by 439% to $16.46 billion, and earnings per share are expected to increase by 418% to $5.65.

While the growth rate of the data center business in the first quarter has slowed down but remains strong, the gaming business growth rate has significantly declined. Specifically:

Data center business revenue is expected to be $21.06 billion, a significant increase of 391.6% year-on-year;

Gaming business revenue is expected to be $2.62 billion, a 16.9% increase year-on-year;

Professional visualization business revenue is expected to be $480 million, a 61.8% increase year-on-year;

Automotive business revenue is expected to be $290 million, a 1.2% decrease year-on-year;

OEM and other business revenue is expected to be $85.7 million, an 11.3% increase year-on-year.

In addition to profitability, this financial report should also focus on whether NVIDIA's demand growth will slow down amid chip upgrades.

HSBC predicts that due to the easing of the CoWoS production capacity tightness and the delayed release of the B100 product, NVIDIA's performance in the second half of this year will have limited upside potential; however, Morgan Stanley believes that NVIDIA's chip demand remains strong and is expected to continue into next year.

HSBC: Market Underestimates NVIDIA's Pricing Power, More Bullish on Fiscal Year 2026

Among all the investment banks that have announced their outlook, HSBC is relatively optimistic, expecting NVIDIA's first-quarter revenue to reach $26 billion, higher than Wall Street's consensus expectations and NVIDIA's own guidance.

HSBC also predicts that NVIDIA's revenue will continue to increase to $28 billion in the second quarter, with limited upside potential for NVIDIA's performance in the second half of this year due to the easing of the CoWoS (advanced packaging) production capacity tightness and the delayed release of the B100 product.

Product upgrades will be the biggest uncertainty in the second half of this year. The Blackwell series chips are expected to be launched in October or November, with the price of a single GPU likely to be around $30,000 to $40,000.

Compared to fiscal year 2025, **HSBC is more bullish on NVIDIA's performance in fiscal year 2026, expecting full-year revenue to reach $196 billion. HSBC also believes that the pricing power of NVIDIA's NVL servers is still underestimated by the market, which will be a key factor driving significant revenue growth for the company NVIDIA's NVL36/NVL72 server architecture pricing power is expected to be the main driver of financial growth in 2025: We believe NVIDIA will continue to demonstrate its strong pricing power through its NVL36/NVL72 server rack systems and GB200 platform, which will once again surprise the market in the 2026 fiscal year.

Based on the assumption of NVIDIA's NVL36/NVL72 server unit prices of $1.8 million/$3 million and an estimated shipment of 35,000 units, NVIDIA is expected to achieve revenue of $196 billion in the 2026 fiscal year.

HSBC predicts that by the 2026 fiscal year, the NVL servers alone will contribute $67 billion in revenue and drive data center revenue to $180 billion.

HSBC Bank maintains a "buy" rating on NVIDIA and raises the target price from $1050 to $1350.

Morgan Stanley: Strong Demand Sustainable Until Next Year

Morgan Stanley also agrees that NVIDIA will once again have a strong quarterly financial report, with first-quarter revenue expected to be $24 billion, in line with NVIDIA's guidance and consensus expectations.

The institution points out that demand for NVIDIA chips remains strong before transitioning to the Blackwell architecture, and is expected to continue into next year.

Based on CoWoS capacity (from TSMC's 60,000 wafers), we estimate that around 420,000 GB200 super chips will be shipped downstream in the second half of 2024. Assuming half are used for racks and half for AI servers, this implies 4,000 NVL72 racks and 30,000 HGX board units.

For 2025, CoWoS capacity allocation (approximately 230,000 wafers from TSMC) will mean GB200 production will reach around 1.5 to 2 million units.

Morgan Stanley maintains an overweight rating on NVIDIA stock.

How is the market expecting NVIDIA's financial report?

Currently, traders are pricing in the potential volatility of NVIDIA's stock price.

According to data from options analysis company Trade Alert, after NVIDIA announces its financial report, the one-sided volatility of its stock price may reach 8.7%, equivalent to a market value fluctuation of over $200 billion, a figure larger than the total market value of nearly 90% of the companies in the S&P 500 index.

By conventional measures, a $200 billion one-sided fluctuation is huge. However, looking at NVIDIA's stock performance after releasing financial reports in recent years, this fluctuation is not significant. According to Trade Alert's calculations, traders have estimated an average post-earnings day volatility of 12% over the past eight quarters On February 22nd this year, the first trading day after the last financial report was released, NVIDIA's stock price soared by 16.4%, higher than the 13.8% expected by Trade Alert at that time.

As of the close on Monday, NVIDIA's stock price has returned to near its historical high, rising by over 96% year-to-date, with a market value exceeding $2.33 trillion, making it the world's third most valuable listed company, behind only Microsoft and Apple.

At the same time, NVIDIA, as an important indicator of artificial intelligence, its performance is crucial for the direction of technology stocks.

Morgan Stanley expects that if NVIDIA's revenue exceeds market consensus, AI supply chain stocks may have an upside of 3-15%, but if it falls short of expectations, it could lead to a 5-10% decline in the entire sector.

Morgan Stanley's report also mentioned NVIDIA suppliers, including Xinhua Technology, Unimicron, and Foxconn. The institution expects that benefiting from NVIDIA's orders, Xinhua Technology's revenue will increase by over ten percent quarter-on-quarter in the second quarter of 2024.

In a report on Monday, Bank of America strategists wrote that the role of AI is expanding into electricity, commodities, and utilities, and what NVIDIA represents is no longer just a company.

The bank predicts that in the next 12 months, NVIDIA will drive S&P 500 earnings growth by 11%, compared to a 37% increase in the past 12 months.