Nvidia Earnings Preview: Analysts Forecast Sales Record But Stalling Profit Growth On China Curbs

Core Viewpoint - Nvidia is expected to report record sales driven by the AI boom, but the bottom line may be weaker due to regulatory impacts on its China operations [1][4]. Financial Results - Nvidia will announce earnings for the quarter ending April 27, with expected revenue of $43.3 billion, reflecting a year-over-year growth of 66% [2]. - The anticipated diluted earnings per share (EPS) is $0.73, with a net income of $18.2 billion, indicating a 20% annual increase, which is significantly lower than the over 70% growth seen in the previous seven quarters [3]. Market Impact - Nvidia's stock saw a slight decline of 0.4% to $135 per share ahead of the earnings report, with analysts suggesting a need for a positive earnings surprise to boost market performance [4]. - The broader equity market is recovering, with the S&P 500 up 6% in May, marking its best monthly gain since 2023 [4]. Gross Margin Expectations - Analysts from Bank of America expect Nvidia's gross margin to be 58%, the lowest since 2022, but forecast a recovery to nearly 75% by the end of the year [5]. Industry Position - Nvidia holds a dominant position in the semiconductor market for generative AI applications, with a 75% share in the AI accelerator market, making it one of the world's most valuable companies with a market capitalization of $3.3 trillion [6][7]. - Since the launch of ChatGPT in November 2022, Nvidia's stock has surged by 700%, significantly outperforming the S&P benchmark [7]. Company Background - Nvidia was founded in 1993, and its CEO Jensen Huang has become the 11th richest person globally, with a fortune of $119 billion [8][9].