Nvidia Corporation (NASDAQ:NVDA)’s third-quarter statement next Tuesday will be one of the most closely watched of the year-end tech earnings season, with Wall Street eager to see if the California microchip megacap has more gas left in the tank.
Just to recap, Nvidia shocked the Steet with its AI-powered, record $3 billion revenue beat in August.
“A new computing era has begun,” chief executive Jensen Huang said at the time. “Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI.”
Indeed, Nvidia shares have absolutely skyrocketed in 2023 thanks to its close association with machine learning and large-language models (some 10,000 Nvidia chips were used to train the ChatGPT game-changing LLM).
Year to date, Nvidia shares are up 250%. Surely there’s no more headroom left?
Here’s what the company is expected to announce on Tuesday: Projected revenue for the upcoming period is estimated to be around $16 billion, subject to a variance of plus or minus 2%.
In other words, an 18% quarter-on-quarter increase.
Gross margins are anticipated to be 71.5% on a GAAP basis with a possible fluctuation of 50 basis points in either direction, with operating expenses forecasted to be approximately $2.95 billion.
The headwinds cannot be ignored. AI chip export controls against China have brought uncertainty to this lucrative market, while rival AMD is ramping up its competitiveness in the semiconductor market.
Nvidia has broadly brushed aside these concerns but there are also fears of an impending bursting of the AI bubble, something well out of the megacorporation’s control.
The alternative narrative is that Wall Street is actually underplaying the significance of AI in the US tech sector.
Wedbush analysts put it well when they wrote: “We view AI as the most transformative technology trend since the start of the Internet in 1995 and believe many on the Street are underestimating the $1 trillion of AI spend set to happen over the next decade in a bonanza for the chip and software sectors looking forward with Nvidia and Redmond leading the way.”
Nvidia’s third-quarter results on Tuesday, November 21, combined with 2024 guidance, will help shed further light on the matter.