Nvidia (NASDAQ:NVDA) is scheduled to announce its Q1 earnings towards the end of May. The consensus estimates earnings of $0.89 per share, reflecting a 45% increase from the previous year, while revenues are projected to rise by 65% year-over-year to $43 billion. This growth is expected to be fueled by sustained high demand for the company’s GPU chips utilized in generative AI applications. In the prior quarter, Nvidia reported having significantly increased the large-scale production of its latest Blackwell AI supercomputers. These new chips, equipped with advanced AI features and premium pricing, could potentially enhance top-line growth throughout Q1 FY’26 (FY’25 concluded in January 2025), while also improving margins. However, investors will keep a close eye on Nvidia’s future projections, especially given the growing uncertainty regarding U.S. trade policies and tariffs affecting key trading partners. The Trump administration is also considering tighter regulations on AI chip exports through newly introduced AI diffusion rules, which could represent a considerable threat to Nvidia’s long-term growth by restricting sales in crucial international markets.
Nvidia currently has a market capitalization of $2.7 trillion. Revenue over the previous twelve months amounted to $130 billion, alongside an operational profit of $81 billion and a net income of $73 billion. That said, for those seeking upside potential with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative, having outperformed the S&P 500 and delivering returns exceeding 91% since its inception.
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NVIDIA’s Historical Odds Of Positive Post-Earnings Return
Here are some insights on one-day (1D) post-earnings returns:
- There are 20 earnings data points documented over the last five years, with 12 positive and 8 negative one-day (1D) returns recorded. In summary, around 60% of the time, positive 1D returns were observed.
- However, this percentage declines to 58% when considering the last 3 years rather than 5.
- The median of the 12 positive returns is 4.6%, while the median of the 8 negative returns is -6.3%
Additional data regarding observed 5-Day (5D) and 21-Day (21D) returns following earnings are summarized along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky approach (though not effective if the correlation is weak) is to examine the correlation between short-term and medium-term returns following earnings, identify a pair that exhibits the highest correlation, and execute the suitable trade. For instance, if 1D and 5D show the strongest correlation, a trader can position themselves “long” for the following 5 days if the 1D post-earnings return is positive. Here is some correlation data extracted from the 5-year and 3-year (more recent) historical performance. Please note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
Is There Any Correlation With Peer Earnings?
At times, the performance of peers can impact the stock’s reaction following earnings. In fact, the pricing in may commence prior to the earnings announcement. Here is some historical data comparing the post-earnings performance of Nvidia stock with that of peers who reported earnings just before Nvidia. For a fair comparison, peer stock returns also represent one-day (1D) post-earnings returns.
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