Nvidia Reports Earnings on Thursday: 7 Important Things to Watch

After falling sharply during the last three months of 2018, Nvidia’s  (NVDAGet Report)  once high-flying stock has only recovered a fraction of its losses thus far in 2019, and is heading into earnings close to where it traded two years ago.

That points to subdued expectations for the GPU giant heading into its July quarter (fiscal second quarter) earnings report, which arrives after the bell on Thursday. On average, analysts polled by FactSet expect revenue of $2.55 billion (down 18% annually) and non-GAAP EPS of $1.15 (down 35%). For the October quarter — Nvidia provides sales guidance in its reports — the consensus is for revenue of $2.98 billion (down 7%).

TheStreet will be live-blogging Nvidia’s report, along with an earnings call that starts at 5:30 P.M. Eastern Time. Here are some things for investors to keep an eye on.

1. Demand from Cloud Giants

A capital spending slowdown among cloud giants and inventory-clearing efforts by enterprise hardware OEMs have been weighing on the sales of Nvidia’s Datacenter segment, which covers the company’s sales of server GPUs and systems/platforms featuring its GPUs. As a result, Datacenter revenue fell 10% annually during Nvidia’s April quarter to $634 million, and the July quarter consensus is for segment revenue to be down 12% to $671 million.

However, while enterprise hardware spending looks soft, firms such as Intel (INTCGet Report) and Seagate  (STXGet Report) have indicated cloud demand will improve during the second half of the year. In addition, Micron (MUGet Report) , which is a major graphics DRAM supplier to Nvidia, said on Monday that it’s seeing improved demand from cloud and graphics clients. For now, the consensus is for Nvidia’s Datacenter revenue, which has benefited a lot from growing AI-related investments by cloud giants, to be down 1% in its October quarter and (amid easier annual comparisons) up 24% in its January quarter.

Nvidia is a holding in Jim Cramer’s Action Alerts PLUS…

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