Nvidia Q2 FY25 Preview: Top Clients’ Capex Spend Expectations Signal Caution

Summary:

  • Nvidia Corporation will probably post a result beat in revenues and margins, simply because it has a phenomenal track record of doing so over the past 78 quarters.
  • Instead, I expect the market’s focus to be on the revenue guidance beat/miss. The market’s expectations are sky-high here, as other semi stocks have been punished for in-line guidance.
  • Downward revisions in Nvidia’s top clients’ capex spend expectations lead me to have low expectations for Nvidia’s revenue guidance, and a cautious stance for a potential post-earnings stock dip.
  • I still think a 43x 1-yr fwd P/E is not excessive for Nvidia, given its rapid growth at high margins.
  • Technically, vs. the S&P 500, there are very few reasons to be bearish on Nvidia.

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Dilok Klaisataporn

Performance Assessment

My last article on Nvidia Corporation (NASDAQ:NVDA) issued a “Buy” rating as argued for why the stock was not yet in a hype cycle. Since then, the performance has been mostly in-line (a small 0.61% lag) vs the S&P 500 (

Company NVIDIA Revenue Contribution
Microsoft (MSFT) 15%
META (META) 13%
Amazon (AMZN) 6.2%
Alphabet (GOOG) (GOOGL) 5.8%
Total 40%


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