Nvidia Stumbled in the First Quarter: Here are My Top 3 Nvidia Predictions for the Second Quarter

Nvidia (NASDAQ: NVDA) has been a surefire ticket to gains for investors for quite some time. The artificial intelligence (AI) chip giant has increased by more than 500% over the past three years, and this isn't just due to optimism about future earnings; Nvidia has been delivering AI-driven growth throughout the AI boom, with revenue and net income climbing in the double and triple digits.

But in the first quarter of this year, Nvidia stock fell into the doldrums, declining about 6%. This isn't a deep decline, but it represents a clear shift in momentum. The reasons behind this movement have been varied, some directly related to Nvidia and others more closely related to the general investing environment. For example, investors have wondered whether the pace of AI spending will continue at current levels -- this spending is a key revenue driver for Nvidia. And investors have also worried about geopolitical instability and the war in Iran, elements that weigh on the overall economy.

Now, as we begin the second quarter of the year, it's a great time to give this once hot stock a second look and consider what's to come. Here are my top three Nvidia predictions for the second quarter.

Image source: Getty Images.

1. Nvidia will start reporting China sales

Since 2022, Nvidia has struggled with U.S. export controls concerning the particularly promising market of China. The company was able to sell a specially designed chip to that market, though -- until early last year. The U.S. halted exports entirely, bringing Nvidia's revenue there to zero. (In the prior fiscal year, China represented 13% of Nvidia's overall revenue.)

Good news arrived in recent months, though, with the U.S. giving Nvidia the nod to export its H200 chips to China. It wasn't initially clear when exports would begin, but last month, Nvidia chief Jensen Huang said the company had received orders from China and was launching manufacturing to serve those orders.

My prediction is Nvidia will start shipping chips to China and recording revenue in the second quarter, so this key market may be on its way to significantly contributing to Nvidia's growth.

2. The company will make more AI deals

Nvidia has been striking AI partnerships left and right over the past few quarters. For example, this fall the company signed an agreement to work with Nokia, even investing in the telecom giant, and this unlocks the opportunity for Nvidia to play a central role in the telecom of tomorrow. As part of the deal, Nvidia is developing AI for telecom as the industry transitions to 6G from 5G.

And just recently, Nvidia joined forces with semiconductor company Marvell Technology -- the partnership brings Marvell's technology into the Nvidia ecosystem, offering customers greater flexibility as they build out their platforms.

These moves are key because they secure Nvidia's position as a future AI winner: These deals progressively expand the company's role in AI, involving it in every aspect of the AI story and therefore also growing the revenue opportunity.

I predict Nvidia will make more of these AI deals, and others may come as soon as the second quarter.

3. Nvidia stock will soar

Today, Nvidia's stock is trading at only 21x forward earnings estimates, making it look like a value stock -- yet at the same time, this company is growing in leaps and bounds. Analysts expect revenue in the current quarter to soar about 77%.

This situation should prompt growth investors to pile into Nvidia stock -- and even some value investors may pick up a few shares at the current level.

So, investors might rush to get in on Nvidia at today's interesting price, but they also may be looking ahead to growth drivers -- such as the company's launch of its Vera Rubin platform later this year, the widespread use of agentic AI, and the development of robotics. All of this is why I predict that investors may return to Nvidia in the second quarter, and the stock will roar higher.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Marvell Technology and Nvidia. The Motley Fool has a disclosure policy.