Nvidia Earnings: What to Watch

After the market closes Tuesday, Nvidia Corp. is scheduled to announce earnings for the first quarter that ended in April. Here's what to look for:

EARNINGS FORECAST: Analysts expect Nvidia to report unadjusted earnings per share of 67 cents, according to a survey by Thomson Reuters, up 103% from the year-earlier quarter. For the full year, they expect it to earn $2.85 per share, up nearly 11% from the previous year.

REVENUE FORECAST: Analysts expect total revenue of $1.9 billion for the quarter, up 46% from the same quarter a year earlier. For the full year, they expect revenue of $8.0 billion, a 16% rise from the previous year.

WHAT TO WATCH:

Data Center: Nvidia has been riding high on increasing adoption of its graphics processing units among the big cloud computing providers. Large-scale cloud operations have been beefing up their offerings in machine learning, where Nvidia's hardware excels. International Business Machines Corp. and Tencent Holdings Ltd. recently added Nvidia GPUs to their cloud offerings, following similar build-outs by other major cloud providers. Analyst Matt Ramsay of Canaccord Genuity Group Inc. in a recent report modeled a 112% rise in data center revenue for the quarter year on year; he foresaw 60% growth for the full year, slowing to 15% the following year.

Automotive: The automotive market is a longer-term bet for Nvidia, but the payoff could be huge as cars evolve into rolling data centers and ultimately become capable of driving themselves. The company has partnerships with a number of car makers including Audi AG, the Mercedes-Benz division of Daimler AG and Tesla Inc. Craig Ellis of B. Riley & Co. LLC estimates that Nvidia's automotive artificial-intelligence customer engagements are up by a factor of 10, year on year. Investors will be looking for evidence that the momentum continues to build amid rising competition.

Gaming: The quarter after the winter season's holiday upgrade cycle traditionally is weak for sales of gaming-oriented graphics cards, where Nvidia gets most of its revenue. After the company's stellar growth in high-end gaming in the previous fiscal year, many investors don't expect to see sequential growth, according to Mitch Steves and Amit Daryanani of RBC Capital Markets LLC. The lower expectations should mitigate some of the risk to gaming sales in the quarter, they said.

(END) Dow Jones Newswires

May 09, 2017 08:14 ET (12:14 GMT)