Top 5 metrics analysts will be watching for NVIDIA’s earnings this evening- will it boom or burst?

Here are the top five metrics analysts will be watching closely:

Data Center Revenue and Growth: This is, by far, the most important metric. The explosive growth of AI has made the Data Center segment the primary driver of NVIDIA's revenue and profitability. Analysts will be looking for a significant increase from the previous quarter and a strong year-over-year growth rate. They will also pay attention to how much of that revenue is from their top-of-the-line Blackwell and other AI chips, as well as the backlog of orders for new products like the upcoming Rubin architecture. The consensus for this quarter's Data Center revenue is around $40.9 billion.

Revenue and Earnings Per Share (EPS): This is the headline number for any company, but for NVIDIA, the focus is on whether they can meet or exceed the already high expectations. A slight miss on either number could send a shockwave through the market, while a significant beat would likely fuel another rally. The consensus estimates for this quarter are approximately $46.0 billion in revenue and $0.94 in EPS.

Gross Margin: This metric indicates the company's profitability after accounting for the cost of goods sold. Analysts will be watching for the gross margin percentage, as any change could signal a shift in pricing power or production costs. For this quarter, analysts are anticipating a recovery to around 71.8% after a dip in the previous quarter. Maintaining or expanding this margin is crucial for the company's valuation.

Forward Guidance: This is arguably just as important as the reported numbers. What management says about the next quarter and the rest of the year will heavily influence investor sentiment. Analysts will be listening for any updates on demand for their AI chips, the production ramp-up of new products, and any potential headwinds, such as the impact of U.S.-China export policies. Strong guidance for the next quarter is key to confirming that the current growth story is sustainable. The company's guidance for the third quarter is expected to be around $48.5 billion in revenue.

Segment Revenue Breakdown: While the Data Center is the star of the show, analysts will also be looking at the performance of NVIDIA's other business segments, particularly Gaming and Automotive. The Gaming segment has been a cornerstone of the company, and its performance can provide insights into consumer demand and the success of new graphics cards. The Automotive and Robotics segments, while currently smaller, are seen as key long-term growth drivers, and any acceleration in their revenue growth would be a positive sign.