It's game time for Nvidia! 

The multinational technology company is set to release its fiscal fourth-quarter results for 2021 (ending January 31st, 2021) after US markets close on Wednesday 24th February. 

Since the start of the new year, shares of the graphics card specialist have jumped over 8% with further upside on the cards if Nvidia posts a positive quarter. Given the continued demand from remote-working trends, ramp up of Ampere gaming processors and resurgence in cryptocurrency mining, the business outlook remains encouraging.

What to expect from the earnings?

According to Bloomberg, Nvidia is expected to deliver $2.81 per share in earnings on revenues of $4.82 billion for the fiscal fourth quarter.

  • The data centre revenue is estimated to hit $1.88 billion
  • Gaming revenues at $2.39 billion
  • Professional visualization revenues estimated at $256.1 million 
  • Automotive revenue at $141.9 million.

While the stay-at-home dynamics are good news for Nvidia, the question is whether the current momentum is sustainable. It must be kept in mind that the chipmaker set the bar high during the fiscal third quarter when it reported earnings of $2.41 per share on revenues of $4.73 billion – a massive improvement from Q2. 

To add further colour, shares have jumped after 7 of the prior 12 earnings announcements while adjusted earnings per share beat estimates in 11 of the past 12 quarters. Although stocks are down over 5% this week, a solid beat could trigger a healthy rebound.

What to watch out for?

It’s all about Nvidia’s data centre business which is slated to deliver another impressive performance thanks to robust demand from cloud service providers. Over the past few months, demand for these services has increased thanks to the pandemic, resulting in a related rise in appetite for Nvidia’s chip. Given how the company has been ramping up the production of its data centers and even recently shipping its A100 GPUs to server partners, revenues from this segment of the business are forecast to hit $1.88 billion.

In regards to gaming, revenues spiked by 37% quarter-on-quarter in the third quarter (reported on November 18, 2020) to $2.27 billion, a record for the company. It will be interesting to see whether gaming revenues meet or exceed the $2.39 billion estimate amid the stay-at-home dynamics. While gaming has driven the company’s growth for many years and remains the bread and butter, opportunities in the data centre could further strengthen the business outlook. 

Nvidia stock gearing for a rebound?

The company’s shares have been quite volatile over the past few days with prices trading around $565.84 as of writing.

Lagging indicators in the form of the 50 & 100 Simple Moving Average favour further upside, while the MACD also trades higher. So far so good, technicals suggest a potential rebound on the horizon if $535 proves to be reliable support. However, a breakdown below this level could open a path towards $504 and $500, respectively. Should bulls gain enough inspiration to challenge $570.70, this could open the doors back towards the 52-week high of $614.52. Ultimately, where Nvidia shares conclude this week may be heavily influenced by the pending earnings report.

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