What to Expect from Nvidia (NVDA) Q1 Earnings Amid Semiconductor Market Downturn

Nvidia NVDA stock slipped 1.5% during regular trading hours Wednesday, just one day before the firm is scheduled to release its Q1 fiscal 2020 financial results. Until recently, shares of the graphics GPU power had soared in 2019, along with the broader market, thanks mostly to its late 2018 selloff.

Shares of Nvidia are now down 15% over the last month as investors and Wall Street start to appreciate just how bad things look for the overall semiconductor market at the moment. So, let’s take a look at what investors should expect from Nvidia’s earnings and revenue after the closing bell Thursday.

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Nvidia was hurt by the cyclical nature of the chip industry last quarter, along with lower demand from cryptocurrency miners, and other headwinds. CEO Jensen Huang called the fourth quarter “an extraordinary, unusually turbulent, and disappointing quarter.”

Meanwhile, fellow chip makers Intel INTC, Advanced Micro Devices AMD, Micron MU, and Lam Research LRCX have already reported their quarterly earnings. Overall, total Q1 earnings for chip companies that have reported results are down -18.5% from the same period last year on -5.5% lower revenues. Plus, research firm International Data Corporation said on Wednesday that it expects global semiconductor revenue to fall by 7.2% in 2019, on the back of subdued smartphones sales, which includes Apple AAPL, and lower Chinese demand.

Shares of NVDA are still up roughly 19% in 2019, which helps them outpace the S&P 500’s 12% climb and its industry’s 6.1%. Despite the recent positivity, Nvidia has seen its stock price fall over 35% in the last 12 months. Nvidia stock closed regular trading Wednesday at $159.58 per share, 55% below its 52-week intraday trading high of $292.76.

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Nvidia’s Q1 fiscal 2020 revenue is projected to sink 31.4% from the year-ago period to hit $2.20 billion, based on our current Zacks Consensus Estimates. This would mark a bigger downturn than Q4 2019’s 24% fall. Looking ahead to the second quarter, NVDA’s revenue is expected to drop by 19.5%.

It is worth noting that the company’s full-year revenue is projected to slip just 5.7% to $11.05 billion. Plus, the GPU power’s fiscal 2021 revenue is expected to climb 21.5% above our current-year estimate to reach $13.24 billion. This would easily top last year’s company-record of $11.72 billion, which should help show investors that the downturn isn’t projected to last long.

At the other end of the income statement, Nvidia’s adjusted Q1 earnings are projected to plummet 60% to $0.82 a share. The company’s full-year EPS figure is then expected to sink nearly 20%. However, like its top-line, Nvidia’s fiscal 2021 earnings are projected to surge back over 37% above our current-year estimate.

Investors will also notice that NVDA’s stock price has tumbled as its current-year consensus earnings estimate continues to fall. Jumping back, we can see that positive estimates coincided with a massive climb for Nvidia stock and vice versa.

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