HomeMost PopularInvestingDatacenter End Market Demand to Aid NVIDIA's (NVDA) Q1 Earnings

Datacenter End Market Demand to Aid NVIDIA’s (NVDA) Q1 Earnings

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NVIDIA Corporation NVDA is set to announce its first-quarter fiscal 2025 results on May 22.

The first-quarter performance of NVIDIA is anticipated to reflect the continued strength of its datacenter end market. This segment is likely to have experienced substantial growth, driven by the rising demand for generative artificial intelligence (AI) and large language models that utilize NVIDIAโ€™s Hopper and Ampere architecture graphic processing units (GPUs).

In the fourth quarter of fiscal 2024, NVIDIA recorded unprecedented revenues in its datacenter market, mainly due to heightened investments in generative AI. Datacenter revenues soared 409% year over year and 27% sequentially to $18.4 billion.

This positive trend is expected to have continued in the current quarter. Projections suggest that first-quarter revenues for the data center market may reach $20.4 billion, marking impressive year-over-year growth of 376% and a sequential rise of 11%.

NVIDIA Corporation Price and EPS Surprise NVIDIA Corporation Price and EPS Surprise

NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote

Generative AI Boom to Drive Revenues

The advent of OpenAIโ€™s ChatGPT has thrust generative AI into the spotlight, signaling the start of a potential AI boom. Generative AI, supported by large language models, can produce a variety of content, including texts, images, audio and synthetic data, revolutionizing industries by modernizing workflows.

The global generative AI market size is anticipated to reach $967.6 billion by 2032, according to a new report by Fortune Business Insights. The market is expected to expand at a CAGR of 39.6% from 2024 to 2032. ChatGPTโ€™s adoption by enterprises has shown its value across sectors such as marketing, customer service and healthcare.

The implementation of generative AI requires significant computational power and expertise, prompting enterprises to upgrade their infrastructure. NVIDIAโ€™s next-generation chips, known for their high computing power, are well-suited for these demands.

As NVIDIAโ€™s GPUs are used in AI models across industries like automotive, healthcare and manufacturing, the demand for its high-performance chips is projected to increase further. NVIDIA expects strong revenue growth in the first quarter of fiscal 2024, reaching $24 billion, driven by increased AI investments in the datacenter market.

Zacks Rank & Other Stocks to Consider

Currently, NVIDIA sports a Zacks Rank #1 (Strong Buy). NVDA shares have soared 86.8% year to date (YTD).

Some other top-ranked stocks in the broader technology sector are Zscaler ZS, CrowdStrike Holdings CRWD and Paycom Software PAYC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of todayโ€™s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Zscalerโ€™s fiscal 2024 earnings has been revised 2 cents upward to $2.73 per share in the past 60 days, which suggests year-over-year growth of 52.5%. The long-term estimated earnings growth rate for the stock stands at 28.1%. The ZS stock has plunged 19.2% YTD.

The Zacks Consensus Estimate for CrowdStrikeโ€™s fiscal 2025 earnings has been revised upward by 2 cents to $3.90 per share in the past 60 days, which calls for an increase of 26.2% on a year-over-year basis. The long-term expected earnings growth rate for the stock is pegged at 22.3%. CRWD shares have risen 35.5% YTD.

The consensus mark for Paycomโ€™s 2024 earnings has been revised upward by 3 cents to $7.68 per share over the past 30 days, which indicates a marginal 0.9% decrease from that reported in 2023. It has a long-term earnings growth expectation of 10.4%. The PAYC stock has declined 11.8% in the YTD period.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Itโ€™s a little-known chemical company thatโ€™s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacksโ€™ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

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NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Paycom Software, Inc. (PAYC) : Free Stock Analysis Report

Zscaler, Inc. (ZS) : Free Stock Analysis Report

CrowdStrike (CRWD) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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