In just a few short years, Nvidia Corp has risen from relative obscurity to become the cornerstone of the artificial intelligence revolution.
No one understands this better than Nvidia’s leather-clad founder, Jensen Huang, who himself emerged from obscurity to be hailed as the modern-day godfather of AI. (Perhaps that’s an overstatement, but at the very least, Huang’s status as the godfather of the GPU has been immortalised in writing.)
Godfather of AI or not, there’s a lot of anticipation surrounding Huang and Co’s second-quarter earnings call on Wednesday, 28 August.
Nvidia earnings in general are among the hottest events in the financial calendar, but the second quarter holds particular prestige.
Take your mind back to a year ago, when Nvidia delivered the biggest semiconductor revenue beat of all time, prompting a deluge of gushing market reactions and an unprecedented rally in its share price.
Shortly thereafter, Nvidia became a two-trillion-dollar company. Then it became a three-trillion-dollar company. Then it (briefly) became the world’s most valuable company.
All because its humble graphics processing units became the structural underpinnings of the new breed of AI computing applications.
Now Nvidia must use its next second quarter to prove that AI still has momentum.
It won’t be an easy task for Huang. While tech company valuations have skyrocketed in the new age of AI, investors have shown a propensity for punishing these companies in equal measure.
Microsoft Corp (NASDAQ:MSFT) provided a prime example of this in July when its stock was stripped of $81 billion for the crime of only growing its AI-powered Azure Cloud computing platform revenues by 19% to a measly $28.5 billion.
The Street was expecting $28.7 billion.
With great power
Without a doubt, Nvidia has been the greatest beneficiary of the AI revolution, but with great power comes great responsibility, and with some voices beginning to speculate on an impending bursting of the AI bubble, the market will be looking to the godfather to allay these concerns.
Key to success will be Nvidia’s new flagship chip, Blackwell.
Blackwell represents the cutting edge of AI-focused units, but whether that translates into raw sales is yet to be seen.
Blackwell is tipped to be released in early 2025, so guidance on pre-orders among blue-chip clients will be closely watched.
In the meantime, investors will want to see consistent growth in sales of the current top-of-the-line H range of units.
That Nvidia sold a lot of GPUs in the second quarter is not a question, but with a valuation as sky high as Nvidia’s, that might not be enough.