Nvidia (NVDA) will close out Big Tech's earnings season when it reports its second quarter results after the bell on Wednesday.
The report comes after a flurry of moves between the company and the Trump administration, which saw Trump revoke his prior ban on the sale of Nvidia's chips to China but will now require the AI giant to pay the government a 15% cut of sales into the country.
Trump initially banned the sale of chips to China in April and dropped the ban in July, adding the 15% fee in August. During its Q1 earnings call, Nvidia said it expects to take an $8 billion hit to its bottom line in Q2.
Trump also announced he will place a 100% tariff on semiconductor shipments into the US unless companies commit to build in the country. Nvidia should be exempt from the tariff.
Nvidia shares were up 35% year to date and 40% over the past 12 months as of Monday. In July, Nvidia became the first company to see its market capitalization top $4 trillion.
For the quarter, Nvidia is expected to report adjusted earnings per share (EPS) of $1.01 on revenue of $46.2 billion, according to Bloomberg analyst consensus estimates. The company saw adjusted EPS of $0.68 and revenue of $30 billion in the same quarter last year. That works out to 49% and 53% year over year EPS and revenue growth, respectively.
The company saw 151% EPS and 122% revenue improvement in Q2 last year. Nvidia's EPS and revenue growth have moderated over the past few quarters following the massive growth spikes it saw during the onset of the AI craze.
Evercore ISI analyst Mark Lipacis projects Nvidia's growth will bottom out at 50%, which could help “attract more momentum investors and translate to multiple expansion.”
Data center revenue for Q2 is expected to top out at $41.2 billion versus $26.2 billion in the prior year period. Gaming, Nvidia's second largest segment, is expected to hit $3.8 billion.
Investors will be on the lookout for continued shipment scaling of Nvidia's GB200 super chip, the ramp of its upcoming Blackwell Ultra chip, AI spending, and commentary on China sales during the company's earnings call on Wednesday.
“Given improving GB200 rack manufacturing yields at server [original design manufacturers], which we believe are approaching 85%, we believe rack shipments are on track to exit [calendar fourth quarter] at 15K-17K racks and believe full-year [Grace Blackwell] rack shipments are tracking closer to 30K, vs. our prior [estimate] of 25K,” KeyBanc Capital Markets analyst John Vinh wrote in a note to investors.
