AI leader NVIDIA NVDA is in the spotlight as it is set to release its fiscal third-quarter 2025 results after market close on Nov. 20. Shares of NVDA slipped ahead of earnings following a report highlighting overheating issues with its latest Blackwell artificial intelligence servers.
The chipmaker has risen 7.8% over the past three months, outperforming the industry’s growth of 4.6%. It is up a remarkable 196% this year. NVIDIA achieved a historic milestone in the post-election rally and became the first company to exceed $3.6 trillion in market capitalization. The success came amid a broader market rally driven by Donald Trump's election victory, which fueled hopes of tax cuts and reduced regulations under his leadership (read: ETFs to Buy on NVIDIA's Historic Journey to $3.6 Trillion).
The strong trend will continue given that NVIDIA is likely to beat earnings estimates. ETFs having the largest allocation to NVIDIA will be in focus ahead of its earnings report. These include T-REX 2X Long NVIDIA Daily Target ETF NVDX, Strive U.S. Semiconductor ETF SHOC, VanEck Vectors Semiconductor ETF SMH, Grizzle Growth ETF DARP and Technology Select Sector SPDR Fund XLK.
Earnings Whispers
NVIDIA currently has an Earnings ESP of +1.70% and a Zacks Rank #1 (Strong Buy). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
There have been no revisions to earnings estimates for the third quarter of fiscal 2025 over the past 30 days. The world’s largest chipmaker’s revenues have more than doubled in each of the last five quarters but the streak is expected to end in the third quarter. However, its blistering revenue growth is expected to continue. The Zacks Consensus Estimate calls for 81.8% revenue growth for the fiscal third quarter. NVIDIA is expected to post earnings growth of 85% for the to-be-reported quarter. NVIDIA’s earnings surprise history is also good, as it delivered an earnings surprise of 12.7%, on average, in the last four quarters.
NVIDIA Corporation Price, Consensus and EPS Surprise
NVIDIA Corporation Price, Consensus and EPS Surprise
NVIDIA has a Growth Score of B and belongs to a top-ranked Zacks industry (in the top 6%).
NVDA Joins Dow Jones
Due to its meteoric rise in market valuation, NVDA joined the 128-year-old blue-chip index, Dow Jones Industrial Average early this month, replacing chipmaker Intel (INTC). The reshuffle reflects a notable milestone, suggesting continued growth for the chipmaker (read: NVIDIA to Join Dow Jones: ETFs to Tap).
What to Watch?
Investors are keen to get some insight into the strength of the AI trade, which has helped drive the S&P 500's gains over the past year. Most analysts believe NVIDIA will become far more valuable in the future due to its dominance in the billion-dollar AI chip market.
Over the past couple of weeks, most analysts have raised their price target on NVDA, reflecting continued confidence in the company’s ability to sustain its growth amid strong demand for AI-driven solutions and data center infrastructure. Analysts are bullish on NVIDIA, with an average brokerage recommendation (ABR) of 1.23 made by 44 brokerage firms. Out of them, 38 analysts rated the stock Strong Buy and 2 rated NVDA as a Buy. Strong Buy and Buy, respectively, account for 86.36% and 4.55% of all recommendations. The average price target for NVIDIA comes to $159.55. The forecasts range from a low of $90.00 to a high of $200.00.
NVIDIA is the world leader in AI chip design and software, controlling between 80% and 95% of the market, according to Reuters. Its success is largely attributed to its leadership in developing advanced graphics processing units (GPUs), which are unmatched in producing processors that power artificial intelligence systems, including generative AI, the technology backing OpenAI’s ChatGPT that can create text, images and other media.
Major cloud service providers rely on NVIDIA’s GPUs to train and run AI applications. The company’s clients include around 20,000 start-ups, along with big names like Microsoft, Alphabet and Amazon.
CEO Jensen Huang expects the data center business to grow "quite significantly next year” and said the demand for its AI GPU called Blackwell is “insane.” It expects billions of dollars in revenues from the new product in the fourth quarter. The chipmaker is attempting to expand production, partnering with Foxconn to build the world's largest Blackwell production facility in Mexico.
NVIDIA’s next-generation GPU chip is expected to drive another round of massive growth. The AI chipmaker unveiled a high-powered version of its Blackwell chip — called the Blackwell Ultra — slated to release in 2025, followed by a new AI chip platform, Rubin, in 2026. The company will debut an Ultra version of Rubin in 2027.
For the third quarter of fiscal 2025, the graphics chipmaker expects revenues of around $32.5 billion, plus or minus 2%.
What Does NVDA’s Valuation Say?
NVIDIA is by far the biggest outperformer among the so-called “Magnificent Seven.” It is currently trading at a P/E ratio of 50.14 versus the Semiconductor - Generalindustry average of 26.36. Despite its high valuation, investor confidence remains strong due to its clear leadership in AI hardware and software solutions. The AI chipmaker’s earnings are growing faster than its share price (read: Pain or Gain Ahead of NVIDIA ETFs?).
Further, the stock is currently trading at a PEG ratio of 1.41, much lower than the industry average of 3.07. The lower the PEG ratio, the better the value, as investors would pay less for each unit of earnings.
Technology Select Sector SPDR Fund (XLK) – NVIDIA exposure: 14.6%
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