NVIDIA currently carries a Zacks Rank of #5 (Strong Sell) and has an Earnings ESP of -13.18%. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. Our proven model does not conclusively predict an earnings beat for NVDA this season. However, disruptions in retail channel sales due to travel restrictions and social-distancing measures implemented across several parts of China, along with ongoing supply-chain constraints and the Russia-Ukraine war, might have weighed on overall financial performance in the fiscal second quarter. The positive trend is likely to have continued in the fiscal second quarter as NVIDIA expects the Automotive segment’s revenues to increase 45% year over year and 59% sequentially to $220 million. The company’s Automotive and Professional Visualization divisions have shown an improvement in trends in three of the last four quarters. NVIDIA projects to report revenues of $3.81 billion from the segment, reflecting an increase of 61% on a year-over-year basis and 1% sequentially. However, the company stated that data-center revenues might fall short of management’s expectations due to the ongoing supply-chain disruptions.

An increase in the Hyperscale demand and the growing adoption in the inference market are likely to have been tailwinds during the to-be-reported quarter. Nonetheless, the continued strength in its data-center business on the growing adoption of cloud-based solutions amid the pandemic-induced work-from-home wave is expected to have boosted NVDA’s second-quarter revenues. The company anticipates reporting Gaming segment revenues of $2.04 billion, down 33% year over year and 44% sequentially. In its fiscal second-quarter preliminary results reported on Aug 8, the company stated that weak top-line performance expectation is primarily attributable to lower sell-in of gaming products, reflecting a reduction in channel partner sales due to macroeconomic headwinds.

NVIDIA’s second-quarter performance is likely to have been negatively impacted by weakening demand for its chips used in the gaming end market.

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