AI giant Nvidia (NVDA) will report its second-quarter earnings after the close of trading on Wednesday. Nvidia’s announcement, the most anticipated of the quarter, will have ripple effects across the tech industry as investors look for signs that AI deals will continue to dominate market conversations in the second half of the year.
Nvidia shares are up more than 163% year to date and up 60% over the past six months. Shares of rival AMD (AMD) are up 9% year to date and down about 14% over the past six months.
Intel (INTC) shares have fallen 57% since the beginning of the year and 53% in the past six months as the company continues to struggle amid a massive restructuring effort.
For the current quarter, Nvidia is expected to report adjusted earnings per share (EPS) of $0.65 on revenue of $28.7 billion. This would represent a 139% increase in EPS and 113% increase in revenue compared to the year-ago quarter, when EPS was $0.27 and revenue was $13.5 billion.
Nvidia is the global leader in AI chip design and software, controlling 80% to 95% of the market, and is expected to maintain its lead as it begins rolling out the next generation of its Blackwell chip line, according to Reuters.
The Information also reported on possible delays to Blackwell’s shipments, but analysts at Goldman Sachs, KeyBanc and Loop Capital don’t see this as a major concern for Nvidia in the near future.
“Our research shows that Blackwell is in fact late, as we originally wrote, but [Aug. 8]It might be like 120 days vs 90 days… but it might not matter much. [1)] TSMC’s hopper yields continue to improve, [2)] “Hopper’s increased production through the fall could outweigh the volume lost due to Blackwell’s production shutdown,” Ananda Baruah, managing director at Loop Capital, said in a note to investors.
This quarter, NVIDIA’s vital data center business is expected to bring in $24 billion in revenue, up 142% from $10.3 billion in the same period last year. Wall Street expects NVIDIA to not only beat second-quarter expectations but also raise its third-quarter guidance, which could be bolstered by recent revenue beats from TSMC, which makes chips for NVIDIA.
However, data center’s growth surge is lower than last quarter’s 426% revenue growth and last year’s fourth quarter’s 408% revenue growth.
That growth is expected to slow further in the third quarter, when the company’s data center revenue is expected to increase 91% year over year to $27.7 billion.
“NVIDIA believes data center revenue will be close to $30 billion in October. And, you know, the law of large numbers. [is] “There’s nothing left here,” Stifel Managing Director Reuben Roy told Yahoo Finance on Monday, “but we again believe the company’s profitability will continue to grow.”
Nvidia’s rivals aren’t resting on the laurels either: Last week, AMD announced it was acquiring ZT Systems for $4.9 billion, a move that gives AMD more leverage in building AI system servers, a big driver of Nvidia’s own sales.
And while this could boost AMD’s sales, it doesn’t mean Nvidia will face any major threat to its status as AI king anytime soon.
“Newer competitors like AMD are starting to gain market share,” Roy said, “but looking at the overall infrastructure spending cycle, which is expected to continue to increase, Nvidia appears best positioned to benefit from this. [spending]”
Besides AI revenue, NVIDIA is also expected to report gaming revenue at $2.7 billion. Once NVIDIA’s main source of revenue, gaming is now a much smaller part of the company’s story. Still, the segment is much larger than NVIDIA’s other businesses, such as professional visualization and automotive.
Contact Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter. Daniel Howley.
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