While some investors consider earnings reports to be boring events, this sentiment changes if the company’s reports have a large influence on the direction of the market. Right now, one could argue that artificial intelligence (AI) is the most influential topic in the market, so when the AI leader reports, investors better pay attention.
NVIDIA (NASDAQ: NVDA) is the undisputed leader in AI investment. Its graphics processing units (GPUs) are the computing muscle behind almost all of the innovative AI models being developed, and it benefited significantly from this trend.
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Nvidia reports third-quarter fiscal 2025 earnings on Nov. 20, making it a big day for the market and the stock. However, stocks have been known to rise or fall dramatically after earnings reports, so investors want to know: “Can Nvidia be bought before November 20?”
Stocks rise or fall after earnings reports because the information investors receive is just one of the few looks we get from a company each year. Waiting a full quarter to hear an update from a giant like Nvidia is a long time, as the landscape changes a lot in that period.
However, the change from the second to the third quarter won’t be as big as it used to be.
In the third quarter of last year’s fiscal year 2024 (ending October 29, 2023), Nvidia’s revenue increased an incredible 206% year over year. This year, it is expected to post 80% revenue growth. While this is a huge slowdown, the 80% growth in revenue is still impressive, especially considering Nvidia’s size.
When a company grows as quickly as Nvidia, it’s best to look at revenue growth quarter over quarter, as long as the company doesn’t show seasonality (revenue rises and falls with the seasons, like a ski resort or water park might see) . Nvidia does not have this problem and, for the third quarter of fiscal 2025, it expects revenue growth of 8.3% quarter-over-quarter. This figure will be worthy of attention, as an error in this figure will show that demand is not growing as fast as it was just a few months ago. But if it exceeds, then it’s clear that companies are still increasing their spending on AI.
I think it is more likely that Nvidia will exceed this number, as we have heard statements from other large technology companies on their conference calls that calendar year 2025 will be a year of increased spending on AI infrastructure. While some of this spending will go toward custom chips these companies have developed, a large portion will go Nvidia’s way, setting the stage for a big quarter, at least on the revenue side.
