Nvidia is set to disclose its fiscal fourth-quarter earnings amid its position as the world’s third most valuable public company, but the stakes are high. The company’s stock has surged fivefold since 2022, driven by increased demand for its graphics processing units at the forefront of the AI boom. Nvidia’s market cap has soared to $1.8 trillion, surpassing tech giants like Alphabet and Amazon, trailing only Microsoft and Apple.
Analysts from Bank of America note the “parabolic” nature of Nvidia’s stock appreciation, attributing it to a mix of fear, greed, and an indiscriminate chase for all things AI. The company’s revenue is expected to witness a remarkable 240% increase to $20.6 billion, with net income surging sevenfold to $10.5 billion. Notably, the gross margin jumped to 74% in the third quarter.
Critical Focus on Nvidia’s Data Center Surge
Analysts Await CEO Insights Amid Concerns Over Major Tech Client Dependency
Much attention is on Nvidia’s data center business, projecting a fourfold increase in revenue to $17.06 billion. Analysts eagerly await CEO Jensen Huang’s commentary for insights into the sustainability of such growth rates. Concerns linger about the dependence on major tech clients like Microsoft, Amazon, Meta, and Google, whose flexible and demand-driven purchasing could pose long-term uncertainties.
While Nvidia’s gaming segment is expected to grow at a more measured rate of 49%, attention also turns to the company’s supply chain resilience and the upcoming release of its AI chip, B100. Analysts anticipate the B100’s impact on data center operators’ Total Cost of Ownership, with plans for the X100 in 2025 fueling expectations for continued growth. However, the blog post raises caution about potential signs of a slowdown in demand from Nvidia’s top customers, emphasizing the need for careful analysis of key metrics and market adoption commentary.
In the spotlight is Nvidia’s gaming segment, which, despite being the company’s original core business, is expected to grow at a more measured rate of 49%, reaching $2.72 billion in revenue. This segment includes graphics cards for PCs and laptops, and interestingly, some of Nvidia’s gaming cards are utilized by small companies and researchers for AI applications.
Thomas O’Malley of Barclays suggests that the upcoming earnings report will revolve around the crucial metric of the data center GPU numbers and broader market adoption commentary. Questions about the sustainability of the current run-rate in the data center, approaching $100 billion per year, are dominating conversations among analysts and investors alike.
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The supply chain dynamics are also under scrutiny, with concerns about Nvidia’s reliance on Taiwan Semiconductor Manufacturing Company for its chips. The company’s ability to meet short-term demand and navigate potential disruptions in the supply chain will likely be a key focus in the post-earnings analysis.
Additionally, the anticipation is building around Nvidia’s latest top-end AI chip, the B100, set to commence shipping later this year. Melius Research analyst Ben Reitzes expresses excitement about the B100 and the subsequent X100 in 2025. Drawing parallels with the upgrade from the A100 to the H100, Reitzes foresees a compelling Total Cost of Ownership benefit for data center operators, positioning 2025 as a growth year for Nvidia.
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As the company stands at the intersection of technological innovation and market demands, investors and industry observers eagerly await the earnings report and, more importantly, insights from Nvidia’s leadership on the company’s strategy, growth prospects, and how it plans to navigate the evolving landscape of AI and data center technologies. The outcome of this report may well shape perceptions of Nvidia’s trajectory in the months to come.