Nvidia (NVDA) is set to release its first-quarter earnings after the bell on Wednesday, in what will be one of the most important reports for investors this year.
Wall Street expects Nvidia to post revenue and profits that are up more than 200% and 400%, respectively, from the same period a year ago, as the company experiences a surge in demand for its chips amid the AI boom .
Analysts expect adjusted earnings per share to total $5.65 on revenue of $24.69 billion, according to Bloomberg data. The company reported adjusted earnings per share of $1.09 on revenue of $7.19 billion in the same quarter last year.
Nvidia shares have been on a tear over the past year, rising more than 200%. Shares are up nearly 700% since the October 2021 stock market lows.
The vast majority of Nvidia’s revenue will come from its data center business, which is expected to bring in $21 billion, up from $4.28 billion in the first quarter of last year.
The company’s gaming division, previously its largest segment, is expected to report revenue of $3.5 billion, up from $2.24 billion in the same quarter last year.
Ahead of Nvidia’s earnings announcement, Stifel analyst Ruben Roy raised his price target for the company’s stock price from $910 to $1,085, saying he predicts Nvidia will once again beat expectations in the next few months. results and will increase its guidance for the next quarter.
Demand for its chips from hyperscalers like Amazon (AMZN), Google (GOOG, GOOGL), Meta (META), Microsoft (MSFT) and others boosted the company’s results, making Wednesday’s report an important check on appetite of the industry for more AI. investment.
And as Yahoo Finance’s Josh Schafer reported on Tuesday, AI trading has moved beyond the technology’s boundaries, with investors looking to energy and energy companies as derivatives playing on the AI boom.
But Roy, like analysts at BofA Global Research and Loop Capital, says there remain near-term concerns about how much the transition from Nvidia’s current Hopper line of AI chips to its Blackwell line will impact overall sales.
The fear is that customers will put some of their orders for Hopper chips on hold while they wait for Nvidia to launch its more powerful Blackwell products. The financial times reported Tuesday that Amazon has paused some orders from Nvidia while it waits for more advanced Blackwell chips to become available.
Loop Capital’s Ananda Baruah argued that it’s possible Nvidia won’t allow companies to suspend their Hopper orders without losing their place in line to buy Blackwell chips. If enough customers suspend their orders in favor of Blackwell chips, Nvidia could see a temporary drop in sales quarter over quarter.
Nvidia is also facing the threat of its customers building their own in-house AI chips.
So far, Amazon, Google and Microsoft are using – or working towards – their own AI chips that provide better power efficiency than Nvidia’s offerings.
This doesn’t mean these companies will abandon Nvidia chips completely, although the push for their own products could reduce the chip giant’s market share. AMD (AMD) and Intel (INTC) are gaining traction when it comes to their own AI chips.
On Tuesday, for example, Microsoft announced that it will begin offering AMD’s MI300X chips to developers who want to train and deploy AI models during the Build conference. The Windows manufacturer also made a point, however, of highlighting that it is also using Nvidia chips.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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