Nvidia Q2 Earnings Preview: Can the AI Frenzy Continue Amid Sky-High Valuations?

investing.com:

All eyes are fixed on Nvidia (NASDAQ:NVDA) as the supplier of Artificial Intelligence (AI) hardware and software gears up to report what could potentially be the most important event of the Q2 earnings season.

Nvidia's May earnings report sent shockwaves throughout global markets, igniting the AI frenzy that sustained this year's bullish trend on the Nasdaq 100, resulting in an impressive 53% surge in the company's stock since then. This added to the California-based giant's astounding 221% surge since January.

What to Expect From Tomorrow's Earnings?

Tomorrow's earnings report is projected to reveal significant growth for the California-based giant. Expected revenue stands at $11.1 billion, showcasing a remarkable 65% increase compared to the same period last year when it was $6.70 billion.

The projected EPS (Earnings Per Share) is anticipated to be $2.09, a substantial rise from the $0.51 reported in the corresponding period last year, indicating a growth of 309%.

Additionally, EBIT (Earnings Before Interest and Taxes) is forecasted at $5.93 billion, a considerable surge from the $1.32 billion recorded in the same timeframe last year, marking a growth of 348%.

These estimations align with the market's expectations of outstanding growth, predominantly driven by the AI theme that has been a focal point of Nvidia's operations.

For those familiar with my investment approach, two critical components in any quality/value analysis are robust balance sheets and appropriate valuations.

In the context of Nvidia, the first component, solid indicators of quality such as favorable earnings and revenue trends and a balanced balance sheet, can be acknowledged. However, on the flip side, certain aspects of the cash flow, for