Nvidia’s AI lead ups stakes for earnings

It’s been a turbulent few days for the tech community since OpenAI CEO Sam Altman was fired and subsequently hired by Microsoft, leading to continued unrest among the engineers who pilot artificial intelligence (AI) technology.

NVIDIA’s financial results, released after the closing bell on Tuesday, will be a new chapter in the world of AI, as the company provides another update on its progress on the AI ​​push that has driven its stock price up more than 245% this year. .

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Nvidia has a list of notable US customers to date, including Microsoft, Amazon, Google, Meta, and OpenAI.

FOX Business previews Nvidia’s long-awaited report.

1. What is Nvidia’s next AI move?

Along with the financial data in Tuesday’s report, NVIDIA shareholders will be keeping an eye on the company’s next moves in the AI ​​space.

Nvidia on Monday announced its latest Ethernet networking AI platform, saying it will soon be available through customers Dell Technologies, Hewlett Packard Enterprise and Lenovo.

“NVIDIA chips are powering the booming AI economy,” Greg Hill, general managing partner at Parkway Venture Capital, told FOX Business. He said: “While investors are looking for signals of demand next year, everyone seems to be looking for confidence that sales growth will continue.”

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“We believe AI will transform nearly every enterprise in the coming years, and Nvidia’s work will be critical to enabling these transformations,” Hill added.

Over the second quarter, a leading cloud service provider announced its massive Nvidia H100 AI infrastructure, as major enterprise IT systems and software providers announced partnerships to bring its AI to every industry. Nvidia CEO Jensen Huang said on an August 23 earnings call.

“As more organizations consider implementing smartbots and chatbots, Nvidia [finds] “New entrants continue to try to ride this wave by announcing newer AI chips, but we’ll see how they catch up in comparison,” said Dan Raju, CEO of Tradier. That would be interesting.” ”

2. Do the results match your expectations?

“We expect further strong results and guidance,” Susquehanna Financial Group analysts said in a recent research note on the company.

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The group’s analysts pointed to improved supply and a large backlog supporting Nvidia’s high forecasts. The company’s valuation is currently approximately $1.2 trillion.

HGX H100 AI supercomputing graphics processing unit on display at Nvidia’s offices in Taipei, Taiwan on June 2, 2023. (I-Hwa Cheng/Bloomberg/Getty Images)

Meanwhile, Wall Street expects third-quarter financial profit to rise 481% to $3.37 per share and revenue to rise 173% to $16.19 billion, according to a Refinitiv survey.

The Santa Clara, Calif.-based company announced a $25 billion share buyback after reporting record revenue of $13.5 billion last quarter as revenue beat expectations.

3. Will Chinese regulations cloud the outlook?

Wall Street will also be watching what Nvidia says about the country when it forecasts next-year earnings and sales, as U.S. restrictions on technology entering and exiting China tighten.

“NVIDIA has such high demand for its chips that reducing or eliminating sales to China will have no impact,” Hill said. “Ultimately, Chinese manufacturers will likely supply the majority of semiconductors for that market, and the adoption of AI technology will not be affected. On a larger scale, U.S.-China tensions over Taiwan There is a much higher risk of impacting the supply chain and disrupting adoptions. ”

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Susquehanna analysts expect growth to slow in coming quarters due to a slight decline in orders due to restrictions in China.

4. Nvidia Stock Performance – What’s Next?

Nvidia stock closed at an all-time high on Monday ahead of the earnings release. The majority of Wall Street analysts are bullish on the stock, with 18 giving it a “strong buy” rating and 33 giving it a “buy,” while 2 give it a “hold” rating and a “sell.” “No one rated it as such.”

“Stock bulls say a rebound in global demand for AI chips, especially in India, will be enough to offset the lack of orders from China, and that NVIDIA’s AI chips are far below peers. “We believe it is excellent and has the potential to continue to do so and prevent further defections,” Ed Egilinski, managing director of Direxion, told FOX Business.

5. What about games?

With most investors focused on Nvidia’s cutting-edge AI technology and chips, the company says its GeForce GPUs promise gamers the most frames per second (FPS) of any competitive game. said.

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Susquehanna analysts say NVIDIA’s game prices remain stable and also report that its gaming market share is increasing despite a drop in Nintendo Switch quarterly sales.

Nintendo Switch game “The Legend of Zelda: Breath of the Wild” seen at a store in Nice, France on May 29, 2023. (Jakub Porzycki/Nurfoto/Getty Images)

The chipmaker is scheduled to release its quarterly report after the close of trading on Tuesday.

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