Earnings Watch: Can NVIDIA keep up its pace?

Earnings Watch: Can NVIDIA keep up its pace?

Equities 5 minutes to read
Peter Garnry

Chief Investment Strategist

Summary:  In today's Earnings Watch we focus on NIO, Sea Ltd and NVIDIA which are all high growth companies that have been the darlings of investors this year. NIO shares are up 1,733% since the lows in March as investors are betting heavily on EVs and especially the Chinese market. Sea Ltd is the fastest growing gaming and e-commerce company in Southeast Asia and almost doubled its revenue in the previous quarter. NVIDIA is our prime focus as no other company has benefitted as much from the acceleration in technology over the past 10 years. NVIDIA grew revenue 50% y/y in the previous quarter driven by its Data Center segment so expectations are high.


The Q3 earnings season is almost done with 90% of the S&P 500 companies having reported already, but this week there are still some interesting earnings to watch. Today, earnings from Chinese companies such as Baidu, iQIYI and JD.com will be watched closely as China has bounced back from the Covid-19 crisis faster than most countries bolstering investor confidence in the Chinese equity market.

On Wednesday, earnings from the Chinese EV-maker NIO will grab the attention with the stock price up 1,733% since the lows in March as investors are betting heavily on the Chinese EV market and this company is the most pure expression an investor can get. But with Friday’s close the company has hit an enterprise value of $62bn which against expected revenue of $2.3bn in 2020 is a very high valuation, not only in general, but in particularly for a carmaker. On Wednesday, we will also get earnings from Walmart and Home Depot which we expect to deliver strong earnings driven by high disposable income in the US from Covid-19 transfers driving high consumer spending on home improvements and food. Sea Ltd also reports on Wednesday, and this fast growing Singapore-based gaming and e-commerce company saw almost a doubling of its revenue in Q2, so expectations are high going into this earnings release.

Source: Saxo Group

The list below shows all the most important earnings this week.

  • Today:Vodafone Group, Recruit Holdings, KE Holdings, Baidu, iQIYI, JD.com, Palo Alto Networks, Tyson Foods
  • Tuesday: Experian, Fortum, NIO, Walmart, Home Depot, Sea Ltd
  • Wednesday:AP Moller – Maersk, SSE, NVIDIA, Copart, ZTO Express Cayman, Keysight Technologies, Lowe’s Cos, Target, TJX Cos, SQM
  • Thursday:Tokio Marine Holdings, NetEase, Ross Stores, Intuit, Workday, Knorr-Bremse

Can NVIDIA deliver 47% revenue growth?

There has probably not been any other company in the world that has benefitted more from the many converging trends of machine learning, cloud/datacenter, gaming and crypto. All applications go back to the graphics card which is better for many of this high computation tasks. But even more importantly, NVIDIA has managed to build aa eco-system around its graphics cards with its CUDA parallelization platform for fast parallel computing which is essential in many of these tasks. This merge between software and hardware strengthens the business and makes it more difficult for competitors to compete with NVIDIA.

Last quarter FY21 Q2 (ending on 26 July), NVIDIA delivered 50% revenue growth y/y while improving EBITDA margin to 40.9% up from 36.3% in the previous quarter and from 27.1% a year ago underscoring that the company has hit an aggressive scalability point in its operations. The key driver of growth has lately come from its Data Center segment which hit $1.75bn in revenue in the last quarter up from $655mn in FY20 Q2. Given we know that NVIDIA is the biggest provider of graphical cards to the crypto mining industry we are wondering whether the company has moved this estimated (we reason why it is an estimate is that NVIDIA likely do not know exactly the purposes from some of its buyers) business to its Date Center segment so the Gaming segment is now more “clean”. We are guessing that this is the main driver as crypto has heated up again the past year and that NVIDIA’s growth rates in the data center industry are too high versus competitors that something else must be driving the result.

Source: NVIDIA

Finally, analysts will focus on the $40bn acquisition of Arm which is a subsidiary of SoftBank Group and holds some of the most important patents in computer chip design. Many Chinse companies including Huawei have been complaining about the deal and it is still uncertain whether the entire deal can go through or whether the Arm China business will have to be spun out of the deal.

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

The information on or via the website is provided to you by Saxo Bank (Switzerland) Ltd. (“Saxo Bank”) for educational and information purposes only. The information should not be construed as an offer or recommendation to enter into any transaction or any particular service, nor should the contents be construed as advice of any other kind, for example of a tax or legal nature.

All trading carries risk. Loses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money.

Saxo Bank does not guarantee the accuracy, completeness, or usefulness of any information provided and shall not be responsible for any errors or omissions or for any losses or damages resulting from the use of such information.

The content of this website represents marketing material and is not the result of financial analysis or research. It has therefore has not been prepared in accordance with directives designed to promote the independence of financial/investment research and is not subject to any prohibition on dealing ahead of the dissemination of financial/investment research.

Saxo Bank (Schweiz) AG
The Circle 38
CH-8058
Zürich-Flughafen
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.