NVIDIA (NVDA) is scheduled to report its fiscal Q1 2026 earnings on May 28, and expectations are sky-high. The company forecasts $43 billion in revenue, while analysts estimate $42.71 billion, signaling a massive 64% increase from a year ago. EPS is projected to rise 42.6% year over year to 87 cents per share.
While NVIDIA has beat earnings expectations in the last four quarters, with an average surprise of 7.9%, current indicators don’t strongly suggest another beat. The company holds a Zacks Rank #3 (Hold) and has an Earnings ESP of -5.24%, meaning a surprise this time isn’t guaranteed.
What’s Driving NVIDIA’s Q1 Performance?
The standout driver remains NVIDIA’s Datacenter business, fueled by explosive demand for generative AI and large language models using its Hopper and Ampere GPU architectures. This segment is expected to deliver $38.5 billion in revenue, up 70.6% year over year.
Other segments are also rebounding:
- Gaming revenue is projected at $3.29 billion (+24.4%)
- Professional Visualization at $567.6 million (+32.9%)
- Automotive at $551.7 million (+67.7%)
These gains reflect solid global demand for GPUs in AI, gaming, and self-driving tech.
Stock Performance and Valuation
NVDA stock has climbed 27% over the past year, outperforming rivals like AMD (-30.1%), Micron (-24%), and Marvell (-19.8%). But the valuation is steep — NVDA trades at a forward P/S ratio of 15.48X, significantly higher than the industry average of 13.26X and far above AMD (5.37X), Micron (2.48X), and Marvell (5.94X).
Should You Buy, Sell, or Hold NVDA?
Despite strong fundamentals and unmatched dominance in AI chips (A100, H100, B100), NVIDIA’s lofty valuation makes it risky for short-term investors. Its growth is fueled by a booming generative AI market, expected to reach $967.6 billion by 2032, but near-term price volatility is likely.
Conclusion: Hold
NVIDIA is a long-term winner in AI and chip design, but at current levels, it’s best to hold the stock and wait for either a pullback or confirmation of stronger-than-expected earnings growth on May 28.
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