Nvidia Beats Expectations Again, But Short-Term Volatility Warning Issued

Second-quarter revenue consensus is $92.55 billion with EPS of $2.09, and third-quarter revenue estimates have risen to $103.7 billion, signaling strong growth ahead. In this earnings release, the forward guidance to be presented, especially third-quarter guidance, rather than the actual second-quarter results, is likely to be the key factor determining the stock's direction.

Brokerages have been actively making positive revisions to Nvidia's earnings estimates. There were 33 upward revisions to EPS and 36 upward revisions to revenue growth estimates, against only one downward revision, reflecting broad market optimism. The current market consensus sits about $1 billion above management's conservative guidance, so investors are focused on whether Nvidia can exceed its guidance.

Nvidia's quarterly revenue estimates also show accelerating growth. Over the past six months, third-quarter revenue estimates were raised 9.61% and fourth-quarter estimates rose 11.22%. Behind these upward revisions are Blackwell architecture, networking solutions, and the possibility of a revenue recovery in the Chinese market, which are being cited as next-generation growth drivers.

In particular, whether second-quarter revenue exceeded $94 billion and whether third-quarter guidance is presented at $104 billion or higher are likely to be the key indicators of whether market expectations are met. If second-quarter revenue falls short or third-quarter guidance is conservative, it could be difficult to elicit a positive market reaction. For now, there are almost no downward opinions on EPS or revenue forecasts.

The strategy is to raise funds as project debt backed by future revenue, easing customers' cost burden for building AI infrastructure and boosting sales of Nvidia's GPUs, which is expected to further consolidate its position in the AI ecosystem.

The ecosystem is expanding through active inflows of venture capital, and Nvidia plays a central role as the core GPU supplier. These partnerships are expected to accelerate AI technology development and commercialization and drive Nvidia's continued growth.

For some projects Nvidia may provide residual value support of up to 25%, which means that if GPU prices fall, GPU utilization declines, or customer creditworthiness deteriorates, Nvidia could be obligated to guarantee the residual value of those projects. Such guarantee obligations could weigh on Nvidia's financial soundness, and it cannot be ruled out that pulling future demand forward could distort current growth indicators.

China could be an important growth driver for Nvidia. In the first quarter, shipments of Hopper products for China were zero, but with shipments of new products such as the H20 now resuming, a revenue recovery in the Chinese market is expected. If political risks such as US-China tensions ease and sales in China pick up, this could contribute significantly to Nvidia's overall earnings growth.

Nvidia is diversifying its product portfolio by evolving from a GPU accelerator focus into a computing systems supplier. In particular, the Vera Rubin accelerator is expected to play a key role in accelerating this transition. Nvidia sees a CPU market opportunity of roughly $20 billion and projects CPU revenue of about $20 billion by 2027. This portfolio expansion should broaden Nvidia's business areas and help secure long-term growth drivers.

Analysis suggests Nvidia's current valuation is low relative to its high growth. Its forward P/E is around 23x, below its five-year average. Its PEG ratio is also very low at 0.5, which can be read as a signal that the stock is attractive given its growth prospects. Valuation multiples are expected to fall to 9.27x on a fiscal 2028 basis, so the view that it is attractive from a long-term perspective is gaining ground.

Whether third-quarter guidance is presented at $104 billion or higher should be closely checked. The market already reflects high expectations for Nvidia, so even if an earnings surprise occurs, room for share price gains may be limited. Conversely, if the stock breaks below the $210 level, downside volatility could accelerate. Even with strong fundamentals, weak guidance or unclear supplementary disclosures could weigh on investor sentiment in the short term, so it is important to thoroughly analyze the earnings release before responding.