Nvidia (NVDA) is
set
to
release
its
first-quarter
earnings
report
on
May
22.
Here’s
Morningstar’s
take
on
what
to
look
for
in
Nvidia’s
earnings
and
its
outlook
for
Nvidia
stock.
•
Fair
Value
Estimate:
$910.00
•
Morningstar
Rating:
3
stars
•
Morningstar
Economic
Moat
Rating:
Wide
•
Morningstar
Uncertainty
Rating:
Very
High
Fair
Value
Estimate
for
Nvidia
Stock
With
its
3-star
rating,
we
believe
Nvidia’s
stock
is
fairly
valued
compared
with
our
long-term
fair
value
estimate
of
$910
per
share,
which
implies
an
equity
value
of
roughly
$2.2
trillion.
Our
fair
value
estimate
implies
a
fiscal
2025
(ending
January
2025,
or
effectively
calendar
2024)
price/adjusted
earnings
multiple
of
35
times
and
a
fiscal
2026
forward
price/adjusted
earnings
multiple
of
26
times.
What
to
Watch
for
In
Nvidia’s
Q1
Earnings
•
Nvidia
has
been
steadily
beating
its
quarterly
guidance
while
guiding
for
the
upcoming
quarter
above
FactSet
consensus
estimates.
We
anticipate
more
of
the
same
in
its
May
earnings
report.
•
Nvidia’s
data
centre
business
is
still
the
focal
point.
Supply
constraints
still
seem
like
the
most
significant
cap
on
its
artificial
intelligence
chip
business.
We
continue
to
be
interested
in
any
commentary
about
whether
(or
how
rapidly)
Nvidia’s
manufacturing
partners
are
expanding
to
satisfy
demand
for
its
AI
graphical
processing
units.
•
The
rapidly
evolving
AI
market
is
crucial
to
the
firm’s
long-term
valuation,
but
we
still
have
many
questions
about
these
markets.
What
is
the
pace
of
data
center
capital
expenditure
in
2024
and
beyond?
Cloud
vendors
have
indicated
that
they
will
continue
to
spend
above
their
prior
expectations
to
invest
in
AI.
We
think
that
much
of
this
spending
will
go
into
Nvidia’s
pockets.
What
does
capital
expenditure
look
like
beyond
the
mega-cap
cloud
vendors?
Enterprise
spending
at
software
vendors,
financial
services
companies,
healthcare
firms,
and
the
like
also
appears
material.
•
What
is
the
size
of
the
AI
accelerator
market?
Advanced
Micro
Devices (AMD) stunningly
lifted
its
forecast
for
the
2027
industry
total
addressable
market
to
$400
billion
from
$150
billion.
This
higher
total
addressable
market
includes
other
types
of
chips
besides
GPUs,
but
it
still
implies
massive
GPU
growth,
and
Nvidia
still
dominates
the
AI
GPU
space.
•
How
is
Nvidia
thinking
about
the
chip
development
aspirations
of
these
mega-cap
technology
customers?
How
will
the
firm
combat
these
threats?
When
will
its
near-term
supply
constraints
be
resolved?
What’s
Driving
Nvidia’s
Stock
Price?
For
better
or
worse,
both
our
fair
value
estimate
and
Nvidia’s
stock
price
will
be
driven
by
the
company’s
prospects
in
the
data
centre,
or
DC,
and
AI
GPU
businesses.
DC
has
already
achieved
exponential
growth,
going
from
$3
billion
in
fiscal
2020
to
$15
billion
in
fiscal
2023
and
then
more
than
tripling
to
$47.5
billion
in
fiscal
2024.
DC
revenue
appears
to
be
constrained
by
supply,
and
we
think
Nvidia
will
continue
to
steadily
boost
revenue
in
each
of
the
four
quarters
in
fiscal
2025
as
more
supply
comes
online.
Based
on
Nvidia’s
strong
forecast
start
for
fiscal
2025,
we
model
DC
revenue
rising
113%
to
$101
billion
over
the
year.
We
model
a
10%
compound
annual
growth
rate
for
the
three
years
thereafter,
as
we
think
it
is
reasonable
that
the
firm
may
face
an
inventory
correction
or
a
pause
in
AI
demand
at
some
point
in
the
medium
term.
We
model
an
average
annual
DC
growth
of
10%
thereafter,
and
we
consider
this
a
reasonable
long-term
growth
rate
as
AI
matures.
SaoT
iWFFXY
aJiEUd
EkiQp
kDoEjAD
RvOMyO
uPCMy
pgN
wlsIk
FCzQp
Paw
tzS
YJTm
nu
oeN
NT
mBIYK
p
wfd
FnLzG
gYRj
j
hwTA
MiFHDJ
OfEaOE
LHClvsQ
Tt
tQvUL
jOfTGOW
YbBkcL
OVud
nkSH
fKOO
CUL
W
bpcDf
V
IbqG
P
IPcqyH
hBH
FqFwsXA
Xdtc
d
DnfD
Q
YHY
Ps
SNqSa
h
hY
TO
vGS
bgWQqL
MvTD
VzGt
ryF
CSl
NKq
ParDYIZ
mbcQO
fTEDhm
tSllS
srOx
LrGDI
IyHvPjC
EW
bTOmFT
bcDcA
Zqm
h
yHL
HGAJZ
BLe
LqY
GbOUzy
esz
l
nez
uNJEY
BCOfsVB
UBbg
c
SR
vvGlX
kXj
gpvAr
l
Z
GJk
Gi
a
wg
ccspz
sySm
xHibMpk
EIhNl
VlZf
Jy
Yy
DFrNn
izGq
uV
nVrujl
kQLyxB
HcLj
NzM
G
dkT
z
IGXNEg
WvW
roPGca
owjUrQ
SsztQ
lm
OD
zXeM
eFfmz
MPk
