NVIDIA Set to Beat Estimates in Q3 Earnings: ETFs to Purchase

AI chief NVIDIA NVDA is within the highlight as it’s set to launch its fiscal third-quarter 2025 outcomes after market shut on Nov. 20. Shares of NVDA slipped forward of earnings following a report highlighting overheating points with its newest Blackwell synthetic intelligence servers.

The chipmaker has risen 7.8% over the previous three months, outperforming the trade’s development of 4.6%. It’s up a exceptional 196% this yr. NVIDIA achieved a historic milestone within the post-election rally and have become the primary firm to exceed $3.6 trillion in market capitalization. The success got here amid a broader market rally pushed by Donald Trump’s election victory, which fueled hopes of tax cuts and diminished laws beneath his management (learn: ETFs to Buy on NVIDIA’s Historic Journey to $3.6 Trillion).

The sturdy development will proceed provided that NVIDIA is prone to beat earnings estimates. ETFs having the biggest allocation to NVIDIA shall be in focus forward of its earnings report. These embody T-REX 2X Lengthy NVIDIA Every day Goal ETF NVDX, Attempt U.S. Semiconductor ETF SHOC, VanEck Vectors Semiconductor ETF SMH, Grizzle Development ETF DARP and Know-how Choose Sector SPDR Fund XLK.

Earnings Whispers

NVIDIA at present has an Earnings ESP of +1.70% and a Zacks Rank #1 (Robust Purchase). In line with our methodology, the mixture of a constructive Earnings ESP and a Zacks Rank #1, 2 (Purchase) or 3 (Maintain) will increase the possibilities of an earnings beat. You may uncover the very best shares to purchase or promote earlier than they’re reported with our Earnings ESP Filter.

There have been no revisions to earnings estimates for the third quarter of fiscal 2025 over the previous 30 days. The world’s largest chipmaker’s revenues have greater than doubled in every of the final 5 quarters however the streak is predicted to finish within the third quarter. Nonetheless, its blistering income development is predicted to proceed. The Zacks Consensus Estimate requires 81.8% income development for the fiscal third quarter. NVIDIA is predicted to publish earnings development of 85% for the to-be-reported quarter. NVIDIA’s earnings shock historical past can be good, because it delivered an earnings shock of 12.7%, on common, within the final 4 quarters.

NVIDIA Company Worth, Consensus and EPS Shock

NVIDIA Corporation price-consensus-eps-surprise-chart | NVIDIA Company Quote

NVIDIA has a Development Rating of B and belongs to a top-ranked Zacks trade (within the top 6%).

NVDA Joins Dow Jones

Because of its meteoric rise in market valuation, NVDA joined the 128-year-old blue-chip index, Dow Jones Industrial Common early this month, changing chipmaker Intel (INTC). The reshuffle displays a notable milestone, suggesting continued development for the chipmaker (learn: NVIDIA to Join Dow Jones: ETFs to Tap).

What to Watch?

Traders are eager to get some perception into the power of the AI commerce, which has helped drive the S&P 500’s beneficial properties over the previous yr. Most analysts imagine NVIDIA will change into much more beneficial sooner or later attributable to its dominance within the billion-dollar AI chip market.

Over the previous couple of weeks, most analysts have raised their worth goal on NVDA, reflecting continued confidence within the firm’s capability to maintain its development amid sturdy demand for AI-driven options and knowledge middle infrastructure. Analysts are bullish on NVIDIA, with a median brokerage suggestion (ABR) of 1.23 made by 44 brokerage companies. Out of them, 38 analysts rated the inventory Robust Purchase and a couple of rated NVDA as a Purchase. Robust Purchase and Purchase, respectively, account for 86.36% and 4.55% of all suggestions. The common worth goal for NVIDIA involves $159.55. The forecasts vary from a low of $90.00 to a excessive of $200.00.

NVIDIA is the world chief in AI chip design and software program, controlling between 80% and 95% of the market, in accordance with Reuters. Its success is basically attributed to its management in growing superior graphics processing models (GPUs), that are unmatched in producing processors that energy synthetic intelligence techniques, together with generative AI, the expertise backing OpenAI’s ChatGPT that may create textual content, pictures and different media.

Main cloud service suppliers depend on NVIDIA’s GPUs to coach and run AI functions. The corporate’s purchasers embody round 20,000 start-ups, together with large names like Microsoft, Alphabet and Amazon.

CEO Jensen Huang expects the information middle enterprise to develop “fairly considerably subsequent yr” and mentioned the demand for its AI GPU referred to as Blackwell is “insane.” It expects billions of {dollars} in revenues from the brand new product within the fourth quarter. The chipmaker is trying to broaden manufacturing, partnering with Foxconn to construct the world’s largest Blackwell manufacturing facility in Mexico.

NVIDIA’s next-generation GPU chip is predicted to drive one other spherical of large development. The AI chipmaker unveiled a high-powered model of its Blackwell chip — referred to as the Blackwell Extremely — slated to launch in 2025, adopted by a brand new AI chip platform, Rubin, in 2026. The corporate will debut an Extremely model of Rubin in 2027.

For the third quarter of fiscal 2025, the graphics chipmaker expects revenues of round $32.5 billion, plus or minus 2%.

What Does NVDA’s Valuation Say?

NVIDIA is by far the largest outperformer among the many so-called “Magnificent Seven.” It’s at present buying and selling at a P/E ratio of fifty.14 versus the Semiconductor – Generaltrade common of 26.36. Regardless of its excessive valuation, investor confidence stays sturdy attributable to its clear management in AI {hardware} and software program options. The AI chipmaker’s earnings are rising sooner than its share worth (learn: Pain or Gain Ahead of NVIDIA ETFs?).

Additional, the inventory is at present buying and selling at a PEG ratio of 1.41, a lot decrease than the trade common of three.07. The decrease the PEG ratio, the higher the worth, as buyers would pay much less for every unit of earnings.