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What To Expect From Nvidia's Q3 Earnings Report

Q3 earnings season is finally starting to wind down, and in nearly every sector of the market, investors have been able to find exciting results. Nevertheless, a few marquee reports remain to be released, including that of Wall Street darling Nvidia Corporation NVDA.

Nvidia has been a leading manufacturer of graphics chips for years, but recently, the company has emerged as one of the stock market’s most exciting growth picks. Shares of the semiconductor giant have gained nearly 100% so far this year, and investors are hoping the stock can break even higher after another impressive report.

Nvidia will release its third-quarter fiscal 2018 financial results after the closing bell Thursday. Based on our current consensus estimates, we expect the company to report earnings of 94 cents per share and revenues of $2.36 billion, which would represent year-over-year growth rates of 13.36% and 17.96%, respectively.

But the most exciting aspect of Nvidia’s impressive growth story has been its management’s focus on cutting-edge technologies. The company has its hands in a variety of emerging tech trends, including autonomous driving, artificial intelligence, and datacenter production.

With that said, investors will likely be focusing on the growth of these initiatives when Nvidia reports on Thursday. Luckily, we can turn to our exclusive non-financial metrics consensus estimate file for a preview of what’s to come. These key stock-driving estimates are updated daily and are based on the independent research of expert stock analysts. For more information on the NFM file, click here.

(Nvidia remains a top choice among PC gamers)

Based on the latest of these consensus estimates, we expect Nvidia’s Gaming division to be the foundation of its report. The company’s high-powered graphics chips are a favorite among PC gamers, and a worldwide rise in the popularity of competitive gaming, known as “esports,” has made this one of the hottest corners of the tech sector.

Our consensus estimate is calling for Nvidia to post Gaming revenues of $1.332 billion, up about 7.07% from the $1.244 billion reported in the year-ago period.

Nevertheless, some of the company’s most exciting growth is coming from its Datacenter segment. Demand for Nvidia’s datacenter-focused products has exploded due to an increase in datacenter production around the world, and management has successfully marketed its solutions to compete with industry leaders like Intel INTC.

According to our latest consensus estimates, Nvidia is expect to post Datacenter revenues of $460 million, which would represent a staggering 91.67% gain from the $240 million reported last year.

Still, investors might be even more interested in the company’s Automotive unit. As the world sits on the cusp of the autonomous vehicle revolution, Nvidia stands poised to be a leader. Through its Drive PX computer and its Tegra mobile processors, Nvidia is providing the power needed to support these innovative machines.

Our consensus estimate is calling for the company to report Automotive revenues of $150 million. This result would mark year-over-year growth of 18.11% from the $127 million posted in the prior-year quarter.

Of course, investors will also be interested to see whether Nvidia can surpass expectations. In an effort to predict the company’s chances of posting an earnings beat, we turn to the Zacks Earnings ESP (Expected Surprise Prediction). The ESP compares the most recent analyst estimates with our overall consensus figure, which takes the average of every estimate we have seen over time.

This is done because, generally speaking, if an analyst evaluates their earnings estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

With that said, Nvidia currently has an Earnings ESP of +0.17%, which implies that analyst sentiment has warmed slightly in the lead up to tomorrow’s report. Along with the stock’s Zacks Rank #1 (Strong Buy), we can feel more comfortable about the odds of an Nvidia earnings beat tomorrow.

Nevertheless, make sure to check back here for our full analysis once Nvidia’s report is out!

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