Should You Add NVIDIA Stock to Your Portfolio Ahead of Q2 Earnings?

NVIDIA Corporation NVDA is scheduled to report second-quarter fiscal 2027 results on Aug. 26, after market close.

The company expects revenues of $91 billion (+/-2%) for the quarter. The Zacks Consensus Estimate is pegged at $91.8 billion, which indicates a whopping 96.4% increase from the year-ago reported figure.

The Zacks Consensus Estimate for quarterly earnings has been revised upward by 2 cents over the past 60 days to $2.09. This suggests growth of 99.1% from the year-ago quarter’s earnings of $1.05 per share.

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Earnings of the graphics chip maker surpassed the Zacks Consensus Estimate in the trailing four quarters, delivering an average surprise of 5.52%.

Q2 Earnings Whispers for NVIDIA Technology

Our proven model does not conclusively predict an earnings beat for NVDA this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here.

Earnings ESP: NVIDIA has an Earnings ESP of 0.00% at present. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: NVIDIA currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Influence NVIDIA’s Q2 Results

NVIDIA’s fiscal second-quarter top line is likely to have benefited from the continued strength in its Data Center business. The increasing adoption of cloud-based solutions amid the growing hybrid working trend is anticipated to have boosted the demand for its chips across the Data Center business. An increase in hyperscale demand and growing adoption in the inference market are likely to have acted as tailwinds in the to-be-reported quarter.

The Data Center business should have benefited from the growing demand for generative AI and large language models using GPUs based on NVIDIA Blackwell architectures. The strong demand for its chips from large cloud service and consumer Internet companies is anticipated to have aided the segment’s top-line growth in the to-be-reported quarter.

NVIDIA is also strengthening its position beyond GPUs through networking products such as InfiniBand, Spectrum-X Ethernet and NVLink. This is likely to have enabled the company to capture a larger portion of AI infrastructure spending during the fiscal second quarter.

NVIDIA’s fiscal second-quarter performance is also likely to have benefited from the continued momentum in its Edge Computing segment, fueled by strong demand across the gaming, robotics and automotive end markets.

NVIDIA’s Stock Price Performance & Valuation

Shares of NVIDIA have been highly volatile over the past year. The stock has gained 21.9% over the past year, underperforming the Zacks Semiconductor – General industry’s rise of 27.3%. The stock has also underperformed major semiconductor shares, including Intel Corporation INTC, Advanced Micro Devices, Inc. AMD and Broadcom Inc. AVGO. Shares of Intel, Advanced Micro Devices and Broadcom have grown 271.5%, 179.3% and 24.2%, respectively.

NVIDIA 1-Year Price Return Performance

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Now, let us look at the value NVIDIA offers investors at the current levels. NVIDIA is trading at a discount with a forward 12-month price-to-earnings (P/E) of 19.69X compared with the industry’s 22.14X, reflecting an attractive valuation.

Forward 12-Month P/E Multiple

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Compared with other chip giants, NVDA trades at a lower multiple against Intel, Advanced Micro Devices and Broadcom. Currently, Intel, Advanced Micro Devices and Broadcom trade at a forward P/E of 51.77X, 39.08X and 20.60X, respectively.

Investment Consideration for NVIDIA

The company remains the clear leader in AI infrastructure. Cloud providers, enterprises and governments continue to invest billions of dollars in building AI data centers, and NVIDIA's GPUs remain the preferred choice for training and running advanced AI models. The company's newest Blackwell and Vera Rubin AI platforms are seeing strong customer adoption due to their superior performance and energy efficiency.

Another key advantage is NVIDIA's software ecosystem. CUDA, along with its expanding AI software portfolio, creates high switching costs for customers, making it difficult for competitors to take market share. This competitive advantage extends well beyond hardware and should continue supporting long-term growth.

As AI adoption expands from model training to large-scale inference and enterprise deployment, NVIDIA is positioned to benefit across every major phase of the AI investment cycle.

Final Thoughts: Buy NVDA Stock Now

As a leading player in the semiconductor industry, NVIDIA has benefited from its dominance in GPUs and strategic expansion into AI and data centers. The company's strong product portfolio, leadership in AI and relentless innovation present a compelling investment opportunity. A lower valuation multiple than the industry also suggests that NVIDIA is a good investment option right now.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

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This article originally published on Zacks Investment Research (zacks.com).

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