Prediction: Nvidia Stock Is Going to Soar After Nov. 20 – The Motley Fool

Nvidia (NVDA 2.25%) At the beginning of 2023, it was a $360 billion company, and in less than two years, its market cap had ballooned to $3.5 trillion. Its ability to turn artificial intelligence (AI) into a cash pile is driving its incredible growth.

Nvidia's data center graphics processing units (GPUs) are the world's most popular for AI development, with demand outstripping supply. This has resulted in the company's revenue growing at triple-digit rates in each of the past five quarters.

On November 20th, Nvidia is scheduled to release new financial results for its fiscal third quarter of 2025 (ending October 31st), but if past quarters are any indication, it's an absolute blowout. It may become. I predict how the stock price will react after the earnings announcement.

Nvidia's new Blackwell chip attracts attention

Nvidia's flagship H100 GPU entered production in 2022 and became the go-to choice for AI data center operators throughout 2023. GPUs are designed for parallel processing, allowing them to complete multiple tasks simultaneously with very high throughput. It also has a large amount of built-in memory, making it ideal for training AI models and performing AI inference.

According to Cathie Wood's ARK Investment, AI applications are driving a productivity boom around the world, with projections that the value of economic activity could reach up to $200 trillion by 2030. The tech giants are microsoft and Amazon Companies are equipping their data centers with AI GPUs and renting out that computing power to developers for a fee. This is a win for them, a win for Nvidia, and a win for developers who can't afford to spend billions on their own infrastructure.

Nvidia's H100 and new H200 remain in high demand, but the company's latest Blackwell architecture promises the biggest performance leap yet. Blackwell-based GB200 GPU systems can run AI inference 30x faster than comparable H100 systems.

CEO Jensen Huang has said that individual GB200 GPUs will cost around $30,000 to $40,000, which is about the same as the H100's original price.

In other words, Blackwell drives tremendous improvements in cost efficiency, making state-of-the-art large-scale language models (LLMs) economically available to a broader range of developers and enterprises.

Shipping of the GB200 has already begun, with shipments expected to increase next year. Some estimates suggest that Nvidia plans to ship up to 200,000 GB200 GPUs individually within the last three months of 2024, with Microsoft currently offering new GPUs to developers. We already know that. Nvidia's fiscal 2025 third quarter includes October, so future reports could include billions of dollars in GB200 sales.

What Wall Street expects from Nvidia's upcoming report

The company posted total revenue of $30 billion in the second quarter of fiscal 2025 (ending July 28), an increase of 122% year-over-year. That beat Wall Street's $28.7 billion estimate. The results included $26.3 billion in data center revenue alone, representing 154% growth, driven primarily by GPU sales.

The chipmaker also had a strong bottom line, with earnings per share (EPS) of $0.68. That was a 152% increase, comfortably beating Wall Street expectations of $0.64 per share.

Wall Street also underestimated Nvidia's third-quarter outlook. The company told investors it expected total revenue to be $32.5 billion, but the Street pegged that number at $31.7 billion.

Analysts have since revised their estimates upward to $32.9 billion (per consensus provided by Yahoo), indicating that management's own expectations may be too conservative. We'll find out for sure on November 20th.

Nvidia stock could soar on the back of third-quarter results

While stock price performance on any given day is just noise, it's worth noting that NVIDIA stock actually fell by about 6% the day after it announced its second-quarter results in August. However, it has since risen 24% (as of this writing) and is currently trading at an all-time high.

The long-term trend is clear, with shares soaring nearly 10x since the beginning of last year alone. If the company beats Wall Street's $32.9 billion revenue estimate in its upcoming third-quarter report, I expect the stock to continue rising in the coming weeks and months.

Its valuation also supports medium-term upside. Wall Street expects the company to post $4.06 EPS in fiscal 2026 (starting in February 2025), giving the stock a forward price-earnings ratio of 35.8. This means the stock would need to rise 90% over the next year or so to maintain its current P/E ratio of 68.1.

AP/E 68.1 is not cheap compared to the market ( Nasdaq-100 However, Nvidia's average P/E over the past 10 years was 58.4. And most of that period didn't even include the incredible tailwinds from AI. So as long as the company meets Wall Street's earnings expectations, there is certainly significant upside potential next year.

NVDA PE Ratio. Depends on the data Y chart.

Microsoft just announced to investors that it had $20 billion in capital expenditures (Capex) in the first quarter of fiscal 2025 (ending September 30), with most of it going to data center infrastructure and AI chips. is. This will be followed by $55.7 billion in capital investment in fiscal 2024. This bodes very well for Nvidia's financial results, as Microsoft is rumored to be the biggest buyer of Blackwell chips at the moment.

But Microsoft isn't alone. Amazon plans to spend more than $75 billion in capital investments in AI this year. meta platform The demand trajectory for Nvidia's GPUs is very clear, which should support strong revenue and profit growth for the foreseeable future.