Nvidia Stock Due for Price Drop After Earnings Report

Nvidia's upcoming earnings report on Wednesday has Wall Street analysts predicting a price drop for the company's stock. Despite consistently underestimating Nvidia's earnings growth, forward estimates have typically increased following each earnings report.

The chipmaker's revenue growth is expected to accelerate in its second-quarter earnings report, with analysts predicting 97.2% year-over-year growth to $92.2 billion. However, the company's stock has not kept pace with this growth, and it now trades at a valuation of around 23.6x for fiscal 2027.

This is due in part to Nvidia's consistently underestimated earnings growth, which has led to increased forward estimates following each earnings report. In fact, forward estimates have trended higher since the start of 2024, with a notable increase expected after Wednesday's earnings report.