Nvidia Braces for Record-Q2 Earnings Amid Slowing Growth Rate Concerns

Nvidia is set to report its Q2 earnings on August 26, and analysts are expecting a significant beat. The company has guided to $91 billion in revenue, which is likely to be surpassed by analysts' estimates of around $92 billion, nearly doubling the year-ago quarter's revenue of $46.7 billion.

Despite the expected beat, some analysts are cautioning that the growth rate may not be as impressive as it seems. Revenue growth from one quarter to the next has been running near 20% for three consecutive quarters, but this time around, the pace is expected to slow down to just 11.5%, according to Nvidia's guidance.

Bank of America analyst Vivek Arya models third-quarter guidance of $107 billion to $108 billion, which is above current estimates. Goldman Sachs analyst James Schneider also expects meaningful upside to guidance and has a Buy rating with a $285 target. The options market has also voted in favor of a significant move, with contracts expiring on August 28 implying a 6.75% move.

Nvidia's Vera Rubin platform is expected to start shipments in the fall, but memory costs are becoming a growing concern for the company. Bank of America still sees margins holding near 73% to 74%, despite the memory hit being around 500 basis points for larger pod systems.