NVIDIA Earnings Expectations Amid Tariff Concerns and AI Demand

The Q1 2025 earnings season is concluding, with most S&P 500 firms having reported results. Overall, the reports have been mostly positive, but tariff discussions are influencing market reactions.

NVIDIA (NVDA) is a focal point this week, having benefitted from strong interest in AI. So far in 2025, its shares have remained stable, closely mirroring the S&P 500’s performance.

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Market turmoil in January, driven by DeepSeek news, contributed to subdued performance for NVIDIA this year. However, many firms are still committed to significant capital expenditures for AI infrastructure, a critical development to monitor.

NVIDIA EPS Expectations

Analysts have revised EPS expectations downward to $0.85, a 7% decline from March but indicating 40% growth year-over-year.

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Sales forecasts remain favorable, predicting a 63% increase compared to the previous year. Demand from Data Center products underpins these impressive growth rates.

The Zacks Consensus estimate for Data Center sales is currently $38.5 billion, up 70% from last year’s $22.6 billion. The company has consistently met or exceeded expectations in this area, recording six consecutive positive earnings surprises.

Below is a chart illustrating NVDA’s quarterly Data Center sales.

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Market commentary regarding China will be critical. The Trump administration’s export restrictions on NVIDIA’s H20 chip are projected to cost the company $5.5 billion.

Despite challenges in China, NVIDIA recently secured a significant partnership with Saudi Arabia’s Public Investment Fund through its HUMAIN subsidiary. This partnership aims to invest in AI factories with a capacity of up to 500 megawatts, utilizing NVIDIA’s advanced GPUs over five years.

“This partnership with NVIDIA reflects SDAIA’s commitment to harnessing and advancing the potential of data and AI through continuous innovation,” stated H.E. Dr. Abdullah bin Sharaf Alghamdi, president of SDAIA. “It marks a significant step toward positioning the Kingdom as a leader among data- and AI-driven economies.”

There is significant global demand for NVIDIA’s GPUs. While challenges in China persist, recent international deals showcase NVIDIA’s ability to pursue growth opportunities.

Below is a chart showing NVIDIA’s robust sales growth quarterly.

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NVIDIA shares currently trade at a forward earnings multiple of 28.8X, significantly lower than the five-year median of 50.1X and highs of 106.3X. The stock is now trading at a 35% premium to the S&P 500, down from 178% in 2024.

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Bottom Line: What to Watch for NVDA Stock

NVIDIA’s upcoming earnings report is anticipated to be a significant event, concluding the Q1 reporting cycle. Analysts maintain a cautious outlook on EPS due to tariffs, but sales expectations remain relatively stable.

Attention will center on Data Center results, which have been pivotal to the stock’s success. Although projected growth rates may show deceleration, they still reflect solid performance.

The China situation will prominently influence post-earnings stock behavior, especially concerning tariff impacts. However, NVIDIA’s international partnerships highlight its potential for continued growth despite challenges.

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