2 numbers I’ll be in search of on November twentieth when Nvidia experiences earnings

Semiconductor darling Nvidia (NASDAQ:NVDA) will report third-quarter earnings of fiscal 2025 on November 20. While there shall be rather a lot to digest from the report, there are two parts particularly that I shall be watching out for.

Let’s discover what I’m most interested in as Nvidia earnings loom, and what I believe these components might imply for traders.

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During the primary half of Nvidia’s fiscal 2025, the corporate repurchased 162.1 million shares of widespread inventory for $15.1 billion. Below his the rest share repurchase programNvidia is permitted to repurchase an extra $7.5 billion in inventory.

However, along with the $7.5 billion talked about above, Nvidia introduced in August that its board of administrators accredited one other $50 billion in buybacks.

On the floor, Nvidia rising its inventory buyback program could possibly be seen as a bullish sign for traders. Generally, firms repurchase shares when administration believes the inventory is undervalued. In this explicit case, I’m very curious to see how a lot of the $50 billion authorization was really allotted to buybacks.

Based on the final two years, Nvidia inventory is buying and selling under common price-to-earnings (P/E) and free money move (P/FCF) multiples as of this writing.

Since the corporate’s new Blackwell GPU is shaping as much as be a vastly profitable product launch, there’s purpose to imagine that Nvidia inventory is about to blow up. Such a transfer would result in an growth of valuations and, subsequently, a dearer inventory.

For these causes, I’ll be taking a detailed take a look at whether or not the corporate repurchased shares in the course of the fiscal third quarter at extra cheap valuations, forward of any Blackwell-led tailwinds. If not, I can not assist however suppose that the $50 billion buyback is a few form of publicity stunt — or as Motley Fool contributor Sean Williams so eloquently put it, a “marketing campaign of smoke and mirrors.”

The hype surrounding Nvidia’s new Blackwell GPU may be very actual. CEO Jensen Huang stated demand for Blackwell is “insane.” Morgan Stanley analysts predict that the product launch might generate $10 billion in income in fiscal 2025 alone.

While Blackwell’s plot is shaping as much as be all good and rosy, there could also be a bit of hiccup looming within the background. IT infrastructure firm Supermicrocomputer focuses on subtle chip architectures and information middle storage clusters. One of the corporate’s closest companions is Nvidia, making it well-positioned to benefit from Blackwell’s upcoming launch. Well, really, possibly not.

The story continues

In current months, Supermicro has been on the middle of a scandal triggered by a quick report from Hindenburg Research, which accused the corporate of accounting violations. More not too long ago, it was dropped by its auditor, Ernst & Young. In the midst of the drama, Nvidia is claimed to be shifting Blackwell orders from Supermicro as a substitute of different suppliers.

While I take into account this a prudent transfer by Nvidia administration, it is troublesome to understand how this may have an effect on short-term provide and demand dynamics. As a consequence, Supermicro’s issues might very nicely permeate some near-term headwinds for Nvidia’s development.

To be clear, I will not be operating for the hills if Nvidia hasn’t began chipping away at its new $50 billion buyback, or if Blackwell’s development finally ends up being extra extended than initially anticipated within the close to time period.

Nvidia inventory has completed fairly poorly over the previous couple of years, and that development will seemingly proceed into subsequent 12 months because of tailwinds pushed by Blackwell. Since this might make Nvidia inventory much more costly, it is pure to surprise when and in what worth vary administration would possibly take into account the inventory buyback a strong monetary transfer.

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Adam Spatacco has positions in Nvidia. The Motley Fool has positions and recommends Nvidia. The Motley Fool has a disclosure policy.

2 numbers I’ll be looking for on November 20th when Nvidia reports earnings was initially revealed by The Motley Fool