Nvidia Report Due May 28: Key Insights Ahead of Earnings
May 28 marks a significant day for Nvidia (NASDAQ: NVDA) as it announces its fiscal 2026 first-quarter results. Earnings reports are critical, providing rare insights for investors about company performance.
Much has transpired since Nvidia’s last update, leading to notable pessimism around the stock. However, this outlook may be unwarranted, as the stock could surge post-earnings announcement on May 28.
Positive Indicators from Clients
Nvidia’s strong potential for solid quarterly results is bolstered by its major clients, who have indicated intentions to maintain their purchasing levels. The company specializes in graphics processing units (GPUs), essential for computational tasks from gaming to AI model training. Nvidia holds a dominant position, with over 90% market share in data center GPUs.
Despite concerns that major clients may be slowing their purchases, signals from large AI buyers demonstrate robust data center spending. Notably, Meta Platforms has increased its capital expenditure (capex) guidance, further supporting Nvidia’s growth narrative.
Nvidia’s continued growth is essential, especially considering its current valuation hinges on sustained rapid expansion.
NVDA PE ratio (Forward) data by YCharts.
The difference between the trailing price-to-earnings (P/E) ratio and the forward P/E suggests a 51% expected growth, with Nvidia trading at 38.7 times trailing earnings and 25.7 times forward earnings. It’s worth noting that this quarter may present a decline in profits due to a $5.5 billion write-off from changes in export restrictions to China. Thus, investors should focus on growth figures, which are projected to remain strong.
Long-Term Growth Prospects
While immediate returns matter, a three- to five-year investment horizon often yields better outcomes. CEO Jensen Huang anticipates data center capex will climb from $400 billion in 2024 to $1 trillion by 2028.
Such growth would be substantial. If this projection holds and Nvidia retains its 30% share of data center infrastructure spending, it could generate $300 billion from GPU sales. This outlook solidifies Nvidia’s position as a leading GPU provider, making it a compelling investment even if short-term expectations do not fully materialize.
Concluding Thoughts
Over the past year, Nvidia’s data center division reported $115 billion in revenue, highlighting its significant role in the data center infrastructure market. The ongoing expansion of AI infrastructure presents continued investment opportunities, ensuring Nvidia remains a strong contender in the tech landscape.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
