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LivestreamMenuConsensus estimates on earnings are a bit of a mug’s game when it comes to Nvidia , the chipmaking behemoth at the heart of the artificial intelligence buildout. Jensen Huang’s company’s consistent beat-and-raise behavior, along with its outsized macroeconomic importance to the computing infrastructure boom, has loosened the tie between its quarterly performance and analysts’ expectations. What Wall Street really pays attention to are the so-called whisper numbers that reflect Nvidia’s history of outperformance and the level of demand for emergent AI technology. Ahead of Wednesday’s earnings, the Nvidia whisper numbers are substantially higher than the formal, written estimates that are based on official guidance from the company. NVDA 6M mountain NVDA 6 months Formally, Wall Street is expecting Nvidia to post second-quarter sales of $92.3 billion, second-quarter earnings-per-share of $2.09 and third-quarter sales guidance of $104.1 billion, according to FactSet. Higher still The whisper numbers are higher still, with analysts and traders thinking third-quarter sales guidance could reach $107 billion to $108 billion, and even as high as $110 billion. “FQ3/Oct revenue bogeys do seem closer to $110b vs. the $107b – $108b range Tim Arcuri believes they will guide to,” traders at UBS wrote in a Tuesday desk note, referring to projections from the bank’s lead semiconductor analyst. Analyst Kevin Cassidy at Rosenblatt told CNBC on Monday that markets would respond positively to a third-quarter revenue forecast around $105 billion. “$110 billion would be a blowout,” he said. JPMorgan analysts said in a Monday research note that they see second-quarter revenue as “potentially landing in the range of $94-95B (up ~15% Q/Q) vs. Street consensus of $92.1B.” Traders at the bank said Tuesday that such outperformance would come in “well ahead of even our buyside bars.” Rising expectations “Expectations continue to creep up; and nobody seems at all concerned the team can’t maintain 75% [gross margins] (something underlined by recent checks suggesting price hikes are coming),” the JPMorgan traders wrote. Mizuho traders seconded that optimism, suggesting it could spill over to the semiconductor sector more broadly. “I lean more positive vs. negative on Semis and Tech broadly, expecting NVDA earnings to be more a catalyst for upside vs downside,” Jordan Klein, a trader at Mizuho, wrote on Tuesday. Other trading desks on Tuesday expressed doubts about whether any upside in Nvidia’s performance numbers, regardless of size, could move the stock, in contrast to announcements of buybacks or product price increases. “The question is whether a beat-and-raise even matters anymore, or if the stock’s reaction will depend more on the qualitative commentary,” UBS traders wrote. Bank of America traders said that capital allocation was the main thing they were looking for to move the needle for Nvidia. “On NVDA this week, capital allocation remains the key topic,” they wrote. Analyst Vivek Arya at Bank of America suggested that Nvidia could follow the buyback model of Apple, which increased returns to shareholders after the explosive growth of the iPhone more than a decade ago. “We see a significant opportunity here for NVDA to run Apple’s post-2012 playbook: lifting cash returns from ~50% of [free cash flow] today to 75%+,” he wrote Monday. “A bigger buyback would create that incremental marginal buyer and blunt the perception of risky AI-ecosystem investments.”Read More
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