Nvidia’s Earnings Announcement Could Ignite Stock Surge

Semiconductor company Nvidia (NASDAQ: NVDA) has become a leading choice for investors focused on artificial intelligence (AI) stocks. Since the launch of ChatGPT in late 2022, Nvidia’s shares have risen approximately 950%, making it the standout performer in the S&P 500 (SNPINDEX: ^GSPC).

On Wednesday, Nov. 20, Nvidia is set to report its earnings for the third quarter of fiscal 2025, which ended in October 2024. Here are three reasons why this announcement could lead to a stock price surge in the days and weeks that follow.

1. Anticipated Positive Updates on Blackwell GPUs

Nvidia produces industry-leading graphics processing units (GPUs), which are essential for powering AI workloads. With over 80% market share in AI accelerators, Forrester Research stated that “Without Nvidia GPUs, modern AI wouldn’t be possible.”

During the last quarter, Nvidia announced that production of its advanced Blackwell GPU would begin in the fourth fiscal quarter of 2025, which ends in January 2025. Analysts expect management to provide further updates in the upcoming earnings call, offering shareholders reason for optimism. CEO Jensen Huang has claimed that the Blackwell launch will be the most successful in Nvidia’s history.

Recent comments from Nvidia executives indicated that Blackwell GPUs are already “booked out 12 months,” suggesting high demand. Consequently, during the third-quarter earnings announcement on Nov. 20, Nvidia is likely to provide encouraging guidance, potentially driving the stock higher.

2. Increased Earnings Estimates from Wall Street Analysts

Nvidia’s guidance for the third quarter has been positive, with management forecasting an 80% revenue increase to $32.5 billion (plus or minus 2%) due to strong demand for its current Hopper GPUs. They also projected non-GAAP earnings to rise 80% to $0.72 per diluted share (plus or minus 2%).

Since this initial guidance, Wall Street analysts have upped their third-quarter earnings estimates. The current consensus is calling for an earnings boost of 85% to $0.74 per diluted share, according to LSEG. Analyst price targets have also increased, suggesting a potential 10% upside with a consensus target of $156 per share compared to the current price of $142.

While analysts do not have all the answers, their insights are often more informed than those of retail investors, providing a reliable measure of market sentiment. The rise in optimism among analysts ahead of the earnings report implies thorough research, which could lead to further price increases following the announcement.

Image source: Getty Images.

3. Rising Capital Expenditures Among Nvidia’s Major Clients

Nvidia has secured partnerships with top hyperscale cloud computing companies, including Alphabet, Amazon, Meta Platforms, and Microsoft. These firms have aggressively invested in AI infrastructure through 2024 and anticipate further increases in their spending next year.

• Alphabet: Reported $13 billion in capital expenditures in Q3, mainly for infrastructure, with expectations of similar spending in Q4 and an increase in 2025.
• Amazon: Projected capital expenditures around $75 billion for 2024, with CEO Andy Jassy indicating anticipated increases in 2025, focused on cloud computing and generative AI.
• Meta Platforms: Estimated $40 billion in capital expenditures for 2024, primarily for AI servers, with expectations of significant growth next year.
• Microsoft: Announced $20 billion in expenditures for Q1 of fiscal 2025, with CFO Amy Hood indicating sequential increases due to cloud and AI demands.

This heightened spending reflects strong demand for Blackwell. Additionally, Nvidia produces central processing units (CPUs) and networking equipment. Bloomberg reports that the company is leading in AI networking gear. Consequently, these trends support the notion that Nvidia will deliver encouraging guidance in its upcoming results announcement, leading to potential stock gains.

Also noteworthy is Nvidia’s strong competitive position due to its vertical integration strategy. As the company designs entire data centers, it can create systems with lower total ownership costs, as noted by CEO Jensen Huang. Analysts, like Morgan Stanley’s Joseph Moore, remarked that the market often underestimates the challenges associated with competing with Nvidia.

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