Nvidia Faces Challenges: EPS and Revenue Trends Revealed

Nvidia Faces Challenges: Understanding Recent EPS and Revenue Trends

Nvidia (NASDAQ: NVDA) experienced a notable drop of 6% recently, which raised eyebrows following CEO Jensen Huang's optimistic speech at CES. It seems that the market was not entirely convinced by the excitement surrounding the new products mentioned, considering the significant trading volume of 347 million shares on that day.

This figure surpassed the average daily volume of 218 million shares, indicating a worrying 59% increase in volume, but to the downside. Such movements often signal that there may be underlying concerns regarding the company’s future performance.

Let’s delve into the forward EPS and revenue estimates for NVDA, as well as the recent revisions that could provide more context around its performance.

Insights into NVDA EPS Estimate Revisions

The fiscal year for NVDA is shaping up to be interesting, especially with the upcoming report scheduled for February. According to recent data, NVDA’s EPS estimates have seen substantial revisions over the past year:

• A year ago, NVDA’s earnings per share (EPS) was projected at $2.08 for fiscal ’25. Yesterday's revised estimate stands at $2.95, reflecting a strong positive revision of 42% over the last 12 months.
• In February of the previous year, the EPS outlook was $2.44, which has now increased by 21% to $2.95.
• Back in May, it was estimated at $2.70, making the current revision $2.95 a positive adjustment of 9%.
• Then in August, the forecast was at $2.82, leading to the existing estimate of $2.95, a 5% positive change.
• Finally, in November, the EPS targeted figure remained at $2.95, illustrating no change in estimates over the last couple of months.

Looking ahead to fiscal ’26, the estimates indicate notable revisions as well:

• Initially, the EPS for fiscal ’26 was estimated at $2.3 a year ago, but it has shot up to $4.43, marking a remarkable positive revision of 82%.
• In February, it was at $2.98, which is now up to $4.43, signaling a 49% revision.
• From May, the figures rose from $3.57 to $4.43, representing a 24% upward adjustment.
• Again, from August at $3.97 to $4.43 reflects a 12% increase.
• As of November, the estimate stayed steady at $4.43, showing no change.

Analyzing NVDA Revenue Revisions

Moving on to revenue estimates provides an equally illuminating perspective:

• Last year, the initial revenue estimate for fiscal ’25 was $93.4 billion; however, this has been adjusted to $129.3 billion, a solid 38% increase.
• In February of the previous year, revenue was estimated at $109.4 billion, which has also climbed to $129.3 billion, an 18% revision boost.
• By May, the revenue projections were at $120.3 billion, which remains close to the current estimate of $129.3 billion, showing a 7.5% positive shift.
• In August, the revenue figures rose from $124.8 billion to today's $129.3 billion, signaling a weaker adjustment of 4%.
• As of November, the predictions stabilized as expected revenue estimates remained flat at $129.3 billion.

Observing the pattern of revenue estimates illustrates that the adjustments for fiscal ’25 have become less pronounced as the calendar year unfolds. This gradual decline in revision rates is crucial for a growth-centric company like Nvidia.

Conclusion: What Lies Ahead for Nvidia?

The end of fiscal ’25 is approaching on January 31, and the strength of revisions will determine implications for fiscal ’26 moving forward. Leadership guidance will play a pivotal role in reassuring investors amidst fluctuating market sentiments.

This article reflects my modest position in NVDA, especially given the recent market behavior, testing technical support levels. With the ongoing media buzz surrounding Nvidia, it's quite complex to maintain a larger stake in the stock. However, this is not intended to imply a bearish or bullish stance; it merely represents an examination of the figures surrounding the company.

Frequently Asked Questions

What contributed to Nvidia's recent 6% decline?

The decline came after an optimistic presentation by CEO Jensen Huang at CES, which raised concerns among investors regarding the company’s future performance.

How significant were the EPS revisions for Nvidia?

Nvidia's EPS estimates saw a positive revision of up to 82% for fiscal '26, showcasing strong growth expectations despite recent trading volume declines.

What are the implications of decreasing revenue estimate revisions?

Decreasing revisions may suggest a slowing growth momentum for Nvidia, which is critical for investor confidence in a high-growth stock.

How often does Nvidia report its financial results?

Nvidia typically reports its quarterly financial results in February, May, August, and November each year.

What is the focus for Nvidia looking ahead to fiscal '26?

The focus will be on guidance provided by the company's leadership, especially considering the recent trends in EPS and revenue estimates.

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