Earnings Preview: NVIDIA

NVIDIA (NVDA) is expected to report Q3 earnings after the market close on Thursday, November 5, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 10c for EPS and $838.09M for revenue, according to First Call. Management's guidance from the last earnings call was for Q3 revenue to be up 5%-7% over Q2's reported $776.5M. That implies a range of $815.33M-$830.86M. Some analysts would not be surprised to see a little upside to consensus estimates as Apple's (AAPL) MacBook, an NVIDIA customer, sales were pretty strong during the quarter, and the overall inventory levels remain in balance.

Analyst Views

Thomas Weisel expects NVIDIA could exceed consensus and has October quarter estimates of 8c on $835.2M in revenue. They’re currently modeling for the core GeForce GPU business to improve modestly, growing 2% quarter-over-quarter, with this segment’s gross margin expanding by roughly 200bps to 25.5%. Weisel expects NVIDIA’s high margin, which is 65%-70% of the enterprise business to be up modestly, driven by strong quarter-over-quarter performance from the high-performance Tesla GPGPU product line. The firm anticipates the quarter’s top performer to be NVIDIA’s consumer product line, for which Weisel is modeling quarter-over-quarter revenue growth of 30% driven primarily by the ramping Tegra mobile applications processor. Weisel believes a stronger than expected GPU market offset competitive share loss, as indicated by recent market data. Looking forward: Weisel expects the company to guide in-line with its above-Street January quarter revenue estimate of $930.0M, though from a higher base.

Key issues for the conference call: commentary around market share vs. Advanced Micro Devices (AMD), and how the industry growth rates look in the face of a pending PC upgrade cycle.