Jensen
Huang,
CEO
of
Nvidia,
arrives
for
the
Inaugural
AI
Insight
Forum
in
the
Russell
Building
on
Capitol
Hill
on
Sept.
13,
2023.
Tom
Williams
|
CQ-Roll
Call,
Inc.
|
Getty
Images
When
Nvidia
reports
fiscal
fourth-quarter
earnings
after
the
market
close
Wednesday,
it
will
do
so
as
the
world’s
third
most
valuable
public
company.
Investors
are
giving
the
company
little
margin
for
error.
Nvidia’s
stock
price
has
soared
fivefold
since
the
end
of
2022,
as
demand
has
skyrocketed
for
its
graphics
processing
units
that
sit
at
the
heart
of
the
artificial
intelligence
boom.
Nvidia’s
chips,
such
as
the
H100,
are
used
by
AI
developers
to
create
cutting-edge
models
like
the
ones
OpenAI
used
to
develop
ChatGPT.
The
company’s
market
cap
climbed
to
about
$1.8
trillion
last
week,
surpassing
Alphabet
and
Amazon
and
now
trailing
only
Microsoft
and
Apple.
“NVDA’s
stock
appreciation
has
been
parabolic,”
analysts
at
Bank
of
America
wrote
in
a
report
Thursday.
They
reiterated
their
buy
rating
and
said,
“We
think
one
interpretation
of
this
NVDA
move
is
a
mix
of
fear
and
greed
and
indiscriminate
investor
chase
for
all
things
AI.”
The
other
megacap
tech
companies
all
reported
quarterly
results
weeks
ago.
All
eyes
are
now
on
Nvidia.
Analysts
are
expecting
a
startling
240%
increase
in
revenue
from
a
year
earlier
to
$20.6
billion
for
the
period
ending
Jan.
28,
according
to
LSEG,
formerly
known
as
Refinitiv.
For
every
new
dollar
of
sales
the
company
generates,
it’s
squeezing
out
even
more
profit.
Net
income
likely
surged
more
than
sevenfold
to
$10.5
billion
from
$1.41
billion
a
year
earlier.
In
the
third
quarter,
Nvidia’s
gross
margin
jumped
to
74%
from
53.6%
the
prior
year.
Outsize
growth
is
expected
in
Nvidia’s
data
center
business,
which
includes
its
AI
chips.
Analysts
project
an
almost
fourfold
increase
in
revenue
on
an
annual
basis
to
$17.06
billion,
according
to
FactSet.
Wall
Street
will
be
listening
closely
to
commentary
from
Nvidia
CEO
Jensen
Huang
for
an
indication
of
how
long
these
stratospheric
growth
rates
are
expected
to
last.
The
company
already
reported
200%
year-over-year
growth
in
the
third
quarter,
and
analysts
are
expecting
a
similar
rate
of
expansion
in
the
first
period
of
this
year.
One
potential
concern
is
that
many
of
Nvidia’s
GPU
sales
are
going
to
big
tech
companies
such
as
Microsoft,
Amazon,
Meta
and
Google.
Any
or
all
of
them
could
decide
to
slow
AI
hardware
spending
at
some
point
if
they’re
not
seeing
intended
benefits.
“All
four
communicated
plans
to
significantly
increase
investment
in
their
AI
infrastructure
this
year,
which
bodes
very
well
for
NVDA’s
fourth
quarter
results
and
2024
Q1
guidance,”
wrote
D.A.
Davidson
analyst
Gil
Luria
in
a
note
Thursday.
He
has
a
neutral
rating
on
the
stock
with
a
$410
price
target.
However,
he
warns
that
the
long-term
picture
for
demand
from
Nvidia’s
top
customers
could
be
more
mixed.
“They
referred
to
their
purchasing
as
‘flexible’
and
‘demand
driven,’
implying
they
would
scale
it
down
if
we
got
past
the
current
hype
cycle,”
Luria
wrote.
“While
we
do
not
believe
we
are
there
yet,
we
are
seeing
possible
early
signs.”
Nvidia’s
gaming
segment,
which
includes
graphics
cards
for
PCs
and
laptops
and
used
to
be
the
company’s
primary
business,
is
also
expected
to
grow,
but
at
a
more
measured
rate
of
49%
to
$2.72
billion
in
revenue.
Some
of
Nvidia’s
gaming
cards
are
also
used
by
small
companies
and
researchers
for
AI.
Thomas
O’Malley
of
Barclays
said
the
report
will
be
fairly
simple
to
analyze.
“The
[data
center]
GPU
number
will
be
the
only
key
metric
that
matters
along
with
commentary
on
broader
market
adoption,”
O’Malley,
who
has
a
neutral
rating
on
the
shares,
wrote
Friday.
“Most
conversations
we
have
center
on
the
sustainability
of
the
current
run-rate
in
[data
center],
which
is
approaching
$100B
per
year.”
Other
analysts
are
focused
on
whether
Nvidia
has
enough
supply
to
meet
short-term
demand,
in
part
because
the
company
relies
on
Taiwan
Semiconductor
Manufacturing
Company
for
its
chips.
There’s
also
budding
anticipation
regarding
the
company’s
newest
top-end
AI
chip,
called
B100,
which
starts
shipping
this
year.
“We
are
particularly
excited
about
Nvidia’s
plans
to
launch
the
B100
later
in
2024
and
the
X100
in
2025,”
wrote
Melius
Research
analyst
Ben
Reitzes,
who
recommends
buying
the
stock,
in
a
report
last
week.
“If
the
upgrade
from
the
A100
to
the
H100
is
any
indication,
the
Total
Cost
of
Ownership
benefit
for
data
center
operators
will
be
enticing
enough
to
fuel
the
upgrade
and
make
2025
a
growth
year.”
