NVIDIA's Q1 Earnings Coming Up: Time to Buy, Sell or Hold the Stock?

Core Viewpoint - NVIDIA Corporation is expected to report strong first-quarter fiscal 2026 results, with projected revenues of $43 billion, reflecting a 64% year-over-year increase [1] Revenue Estimates - The Zacks Consensus Estimate for NVIDIA's quarterly earnings is 87 cents per share, indicating a 42.6% growth from the previous year's earnings of 61 cents per share [2] - Revenue estimates for the Datacenter end market are projected at $38.5 billion, showing a robust year-over-year growth of 70.6% [7] - The Gaming end market is estimated to generate $3.29 billion in revenue, representing a 24.4% increase from the prior year [8] - The Professional Visualization segment is expected to reach $567.6 million, indicating a 32.9% year-over-year growth [9] - The Automotive segment is projected to generate $551.7 million, reflecting a 67.7% increase from the previous year [10] Market Performance - NVIDIA's stock has gained 27% over the past year, outperforming the Zacks Semiconductor – General industry's growth of 23.5% [11] - The stock has also outperformed major competitors such as Advanced Micro Devices, Micron Technology, and Marvell Technology, which have seen declines of 30.1%, 24%, and 19.8% respectively [11] Valuation Metrics - NVIDIA is trading at a forward 12-month price-to-sales (P/S) ratio of 15.48X, compared to the industry average of 13.26X, indicating a stretched valuation [13] - The company also trades at a premium compared to other semiconductor players, with competitors like Advanced Micro Devices, Micron Technology, and Marvell Technology trading at forward P/S multiples of 5.37X, 2.48X, and 5.94X respectively [16] Growth Drivers - NVIDIA's revenue growth is driven by strong demand for chips used in generative AI applications, with the global generative AI market expected to reach $967.6 billion by 2032, growing at a CAGR of 39.6% from 2024 to 2032 [18] - The company's advanced AI chips, including the A100, H100, and B100, are positioned as top choices for enterprises looking to upgrade their network infrastructures for generative AI applications [19] Conclusion - NVIDIA's leadership in GPUs and strategic expansion into AI, data centers, and autonomous vehicles present a compelling investment opportunity, although its high valuation may lead to short-term volatility [20]