NVIDIA Likely to Beat Q2 Earnings Estimate: How to Play the Stock?

Core Viewpoint - NVIDIA Corporation (NVDA) is expected to report strong earnings for the second quarter of fiscal 2026, with projected revenues of $45 billion, reflecting a 53.2% year-over-year increase, although slightly below the consensus estimate of $46.03 billion [1][8]. Revenue Projections - The anticipated revenue for NVIDIA's Data Center business is $40.19 billion, indicating a robust year-over-year growth of 53% driven by demand for AI and cloud chips [7][8]. - The Gaming segment is projected to generate $3.81 billion in revenue, representing a 32.4% increase from the previous year [9]. - The Professional Visualization segment is estimated to achieve revenues of $529.1 million, reflecting a 16.5% year-over-year growth [10]. - The Automotive segment is expected to report revenues of $591.6 million, indicating a significant year-over-year growth of 67.7% [11]. Earnings Estimates - The Zacks Consensus Estimate for quarterly earnings has increased to $1.00 per share, suggesting a year-over-year growth of 47.1% from 68 cents per share [2]. - The Earnings ESP for NVIDIA is +3.14%, indicating a strong likelihood of an earnings beat this quarter [5]. Market Performance - NVIDIA's stock has increased by 35.3% over the past year, outperforming the Zacks Computer and Technology industry's growth of 18.7% [12]. - The company trades at a forward P/E of 34.78X, which is higher than the sector average of 27.24X, indicating a premium valuation [14]. Industry Trends - The global generative AI market is projected to reach $967.6 billion by 2032, with a CAGR of 39.6% from 2024 to 2032, driving demand for NVIDIA's AI chips [20]. - NVIDIA's dominance in the generative AI chip market positions it favorably for substantial revenue growth as industries modernize their workflows [21]. Investment Considerations - NVIDIA's strong product portfolio and leadership in AI and data centers present a compelling investment opportunity, although its high valuation may lead to short-term volatility [22].