After the market closed on August 28th Eastern Time, the AI chip giant - $NVIDIA (NVDA.US)$ is about to announce its second quarter performance for the fiscal year 2025.

Although Nvidia's stock price has surged more than 150% since the beginning of this year, according to Koyfin's data, the stock reached a peak of around $140 in mid-June and has since remained at a slightly lower level.

This financial report will tell investors whether American companies are still heavily investing in AI technology. It is also the most important technology company's financial report of this quarter, which may determine whether AI trading can continue.

The market generally expects that Nvidia's Q2 revenue will reach $28.639 billion, a year-on-year increase of 112.03%; earnings per share will be $0.60, a year-on-year increase of 141.49%. This means that the company will achieve record revenue and profits for the fifth consecutive quarter.

Among them, according to Bloomberg's consensus forecast, Nvidia's most critical business - the data center, is expected to achieve revenue of $25.023 billion, a year-on-year increase of 142.40%. This means that the share of this business in the company's revenue is expected to further expand to 87%, compared to 86% in the previous quarter.

It is worth noting that market analysis points out that there are many positive news related to Nvidia from mega-scale enterprises in this quarter's financial reports. Based on the financial reports of large tech stocks this quarter, some of Nvidia's largest customers, such as Microsoft, Amazon, Google's parent company Alphabet, and Meta, have all indicated plans to continue investing in AI infrastructure.

In addition, although the data center business has received a lot of attention, the gaming business is still an important source of income for Nvidia. According to Bloomberg's consistent expectations, the gaming business is expected to achieve $2.793 billion in Q2, a year-on-year growth of 12.34%.

Goldman Sachs predicts that with the continued transition and upgrades to the Ada Lovelace architecture, as well as progress in generative AI-related services, Nvidia's gaming division will achieve double-digit growth in fiscal years 2025 and 2026. Specifically, revenue from the gaming business is expected to grow from $9.25 billion in fiscal year 2023 to $14.57 billion in fiscal year 2026, representing a compound annual growth rate of 16.4%.

Market sentiment may depend not only on Nvidia's performance, but also on its performance guidance. Northwestern Mutual Wealth Management states that strong evidence of Nvidia's demand will be a bullish signal, indicating that the company is continuing to invest and will not withdraw due to expected economic slowdown. However, investors are most interested in whether this is sustainable and how the demand will be in 2025 and 2026.

从期权波动率偏度来看，市场情绪对英伟达略微看涨。

How does Wall Street look at this?

Mike Smith, portfolio manager of Allspring Global Investments, believes that NVIDIA has become a stock that represents the trend of the times. The release of its financial report is like the 'Super Bowl' of the financial market, attracting widespread attention and discussion.

Coincidentally, Wedbush referred to Nvidia's upcoming financial report as the "most important tech report" in recent years. The firm states that this week will be the most important week in the stock market this year, and possibly on Wall Street in years. Wedbush also predicts that Nvidia will once again perform well.

Goldman Sachs expects Nvidia's second-quarter revenue and earnings per share to reach $29.769 billion and $0.68, respectively, exceeding market expectations by 4.1% and 5.9%. They also anticipate that earnings per share will exceed market expectations by over 11% in 2025, thanks to the growth in data center revenue and strong operational leverage.

As for the data center department, Goldman Sachs expects that in Q3, the revenue of the department will further increase, achieving a quarter-on-quarter increase of 15%; by 2026, data center revenue will achieve double-digit year-on-year growth.

Goldman Sachs analyst Toshiya Hari believes that Nvidia will continue to maintain its strong position in the AI and accelerated computing fields. Hari believes that...

Recently, there have been some optimistic signals in the entire industry, such as TSMC's HPC business accounting for more than half of total revenue for the first time in the second quarter, and AMD raising its annual expectations for AI accelerator revenue again. Moreover, Nvidia has a large customer base. Although there were rumors of a delay in the shipment of the Blackwell GPU series, Hari believes that it will not have a significant impact.

In addition, Goldman Sachs also predicts that Nvidia will announce specific customer return on investment (ROI) metrics to boost market confidence during the conference call after the Q2 earnings report.

HSBC expects Nvidia's sales in the second quarter to reach 30 billion USD, exceeding the company's guidance and the market's general expectation of 28 billion USD and 2.86 billion USD. The analyst at the bank raised Nvidia's target price from $135 to $145, believing that Nvidia will continue to grow due to strong demand for AI GPUs, and the impact of delayed product roadmaps on earnings is limited.

Analysts from Raymond James, KeyBanc, and other major banks have also stated that despite rumors of a delay in the release of the Blackwell chip, they still believe that Nvidia will deliver a strong financial report.

However, Barclays analysts also caution that Nvidia's financial report could be a "real test" for the overall market, especially the technology sector. If Nvidia's latest financial performance fails to exceed expectations again and raise profit forecasts, it may disappoint investors and have a broader impact on the entire market.

In addition, it is worth noting that Nvidia CEO Jensen Huang has sold a significant amount of Nvidia stock at a high price multiple times this year. It is estimated that he has already cashed out at least 0.578 billion USD between June and August.

How has the stock price performed on past earnings days?

According to Market Chameleon, backtesting the performance of the past 12 quarters, Nvidia has a higher probability of rising on the day of performance release, about 75%, with an average stock price change of ±8.1%, a maximum increase of +24.4%, and a maximum decrease of -7.6%.

Some investors seem to be prepared for a major shock. According to data, currently, Nvidia's implied change is ±10.9%, indicating that the options market is betting on a single-day stock price change of 10.9% after earnings; in comparison, Nvidia's average post-earnings stock price change in the previous four quarters was ±7.1%, indicating that the current options value of the stock is overestimated.

From the skewness of the options volatility, the market sentiment towards Nvidia is slightly bullish.

Nvidia plans to hold an earnings livestream on August 29, 2024 (Thursday) at 05:00 Beijing time. Everyone is welcome to make an appointment to watch~

Editor/Somer