Nvidia (NVDA) is scheduled to report its third-quarter results after the bell next Wednesday, giving Wall Street the best and most up-to-date information on the strength of the AI trade.
Nvidia's stock price, the world's largest publicly traded company by market capitalization, continued to soar throughout 2024, thanks to the explosive growth of AI in the technology industry and other sectors. Nvidia stock is up 189% year-to-date as of Friday, easily outpacing the company's chip competitors. Shares of Nvidia's closest competitor, AMD (AMD), are down nearly 8% since the beginning of the year, and shares of Intel (INTC), which is struggling to turn around, are down 51%.
Nvidia is expected to post third-quarter earnings per share (EPS) of $0.74 and revenue of $33.2 billion, according to analyst estimates compiled by Bloomberg. This compares to the same period last year, when Nvidia had EPS of $0.40 and revenue of $22.1 billion, representing an 83% year-over-year increase in both revenue and bottom line.
Nvidia's data center division, its largest business, is expected to bring in $29 billion in revenue in the quarter. This is a 100% increase compared to the $14.5 billion the company reported in the third quarter of last year.
Gaming revenue is expected to reach up to $3 billion, a 7% increase from last year, when the sector brought in $2.8 billion.
Analysts expect gross profit margin to reach 75%.
Investors will be watching to see not only whether Nvidia beats fourth-quarter sales and bottom line results, but also whether it raises its fourth-quarter guidance. Analysts expect NVIDIA to release fourth-quarter guidance of $37 billion in revenue for the next quarter.
Even if a company provides a great report and outlook, the stock price could fall after the earnings release. Nvidia beat expectations on revenue and bottom line in the second quarter, beating expected guidance, but the stock still fell 6% shortly after the earnings release.
This could be a sign that some investors are unimpressed with Nvidia's performance compared to the previous quarter, when sales increased 200% and EPS increased nearly 600%. Or, it could simply mean that the investor took profit at that point.
Investors are also looking for insights from CEO Jensen Huang about Nvidia's next-generation Blackwell AI chip products, which will be used to both train and run AI applications. During the company's last earnings call in August, Huang said Blackwell's production would ramp up in the fourth quarter and that the chip was expected to generate billions of dollars in revenue.
Fan said at the time that demand for Blackwell was already outstripping supply and he expected that trend to continue over the next year. Additionally, he said he expects the company's hopper chips, the predecessor to the Blackwell product line, to continue selling well into next quarter.
