Nvidia is set to unveil its fiscal fourth-quarter earnings after the bell on Wednesday, a report eagerly awaited by Wall Street for insights into the longevity of the AI surge.
The company has been the primary beneficiary of the tech industry’s recent fixation on large artificial intelligence models, leveraging its expensive graphics processors for servers.
With its stock price skyrocketing nearly fivefold since the close of 2022, Nvidia now commands a market value of $1.72 trillion, briefly eclipsing tech giants Amazon and Alphabet.
Meeting heightened expectations fueled by investor enthusiasm for AI firms is imperative for Nvidia.
Analysts project a staggering 240% surge in revenue from the same period last year, totaling $20.6 billion, driven primarily by data center revenue of $17.06 billion—predominantly from the sale of AI GPUs like the H100. Net income is anticipated to skyrocket more than sevenfold to $10.5 billion in the January quarter.
Investors are keen to glean insights from Nvidia CEO Jensen Huang on the sustainability of these remarkable growth rates. A key concern is the significant portion of Nvidia’s GPU sales to tech behemoths such as Microsoft, Amazon, Meta, and Google.
While these companies have indicated a continued short-term investment in new GPUs, some analysts are cautious about long-term demand, noting references to their purchases as “flexible” and “demand-driven,” suggesting a potential scaling down beyond the current hype cycle.
Nvidia’s plans to launch its highest-end server GPU, the B100, in 2024 add another dimension to its growth trajectory, with timing potentially impacting the company’s growth rate. For the current quarter, Wall Street analysts anticipate a 208% growth rate, pushing sales to around $22.17 billion.
While Nvidia has diverse revenue streams, from PC gaming chips to automotive chips, Wednesday’s focus will predominantly be on its AI GPUs, which contribute over 80% of its sales.
“The [data center] GPU number will be the only key metric that matters along with commentary on broader market adoption,” noted Barclays analyst Thomas O’Malley in a recent note.
