Nvidia Q1 preview: Gaming, data center businesses poised for strong quarter
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Nvidia (NASDAQ:NVDA) is scheduled to announce Q1 earnings results on Wednesday, May 25th, after market close.
The semiconductor company posted Q4 earnings and gave Q1 guidance that handily beat expectations, although gross margins guidance was flat.
For Q1, Nvidia issued a guidance of $8.1B in revenue, with GAAP and non-GAAP gross margins at 65.2% and 67%, respectively. It expects GAAP operating expenses during the period to be $3.55B, including $1.36B for the Arm-related write off.
The consensus EPS Estimate is $1.29 (-64.8% Y/Y) and the consensus Revenue Estimate is $8.09B (+42.9% Y/Y).
Bank of America analyst Vivek Arya suggested that Nvidia and other chipmakers may benefit from strong results for cloud businesses, with both Microsoft (MSFT) and Alphabet (GOOG) continuing to see strength in their most recent quarters.
Morgan Stanley also expects a strong quarter for Nvidia from its gaming and data center businesses. It sees the stock as a "core holding, but with an overheated near-term gaming environment and a crypto cycle that's coming to an end, we see some headwinds in gaming".
Nvidia's data center business in particular should perform well according to MS, which highlighted Mellanox as showing indications of unfulfilled demand and no slowdown in the business within the forecast horizon.
Shares have seen some recent weakness as the broader semiconductor market selloff worsened. Nvidia has fallen more than -45% YTD. Here's a look at its price return performance versus peers:

Prices reached its all-time trading high of $346.47 last November, as high demand and a global chip shortage fueled interest in the stock. Since then, worries about a lagging economy and the prospects of higher interest rates have weighed on shares, leaving them hovering near their 52-week trading low.
Despite the decline, Nvidia remains in a prime position to take advantage of the demand in the semiconductor market. Industry insiders expect this trend to continue at least for several more years. Intel CEO Pat Gelsinger suggests the shortage will last until 2024.
Recent SA contributors have been cautious on Nvidia, with Envision Research noting "major uncertainties" ahead such as worsening chip shortages and turmoil in cryptocurrency mining.
Over the last 2 years, NVDA has beaten EPS estimates 100% of the time and has beaten revenue estimates 100% of the time.
Over the last 3 months, EPS estimates have seen 3 upward revisions and 1 downward. Revenue estimates have seen 3 upward revisions and 1 downward.