Nvidia (NVDA) will report its fourth quarter results after the bell on Wednesday. This is one of the most anticipated earnings reports in recent memory. The darling AI chip’s stock has soared 184% in the past 12 months, easily outpacing rivals AMD (AMD) and Intel (INTC), which are up 91% and 67%, respectively.
Nvidia’s phenomenal performance temporarily boosted its market capion Last week, it overtook Amazon (AMZN) and Google’s parent company Alphabet (GOOG, GOOGL) to become the world’s third-highest publicly traded company, behind Microsoft (MSFT) and Apple (AAPL). But as of Tuesday, Amazon and Alphabet had regained the lead over Nvidia.
Analysts expect NVIDIA to report adjusted earnings per share (EPS) of $4.60 and revenue of $20.4 billion in the fourth quarter. EPS was $0.88 (compared to $6.1 billion in the same period last year). This is a 234% increase over the previous year. To put Nvidia’s performance in perspective, the company reported $27 billion in revenue for all of 2022.
Analysts expect Nvidia’s data center revenue to be $17.2 billion in the quarter, up from $3.62 billion in the year-ago period. Nvidia’s data center division has quickly become its most important source of revenue due to rapidly growing interest in artificial intelligence due to the explosion of generative AI apps.
In January, META announced that it would build an AI data center that could accommodate 350,000 Nvidia’s flagship H100 chips by the end of 2024. Nvidia hasn’t disclosed the price of the chip, but the H100 is estimated to cost in the tens of dollars. Thousands of dollars. That means Meta alone will cost him billions of dollars for Nvidia chips.
Gaming, once Nvidia’s largest business unit, is expected to generate $2.7 billion in revenue, up from $1.8 billion last year.
Analysts are also paying close attention to Nvidia’s future guidance. The company has easily beat revenue estimates over the past few quarters, and further beats would signal continued strength in the AI industry.
It’s no exaggeration to say that expectations are high for Nvidia. Many Wall Street analysts have changed their price targets for the company’s stock, with UBS analyst Timothy Arcuri raising his price target for the bank from $580 to $850, and Stifel’s Robin Roy The company has set a new price target of $665 to $865. Wedbush’s Matt Bryson also raised his company’s price target on Nvidia from $600 to $800.
However, NVIDIA’s growth faces challenges from all sides. The company’s biggest rival, AMD, is investing heavily in its AI chips, including the new MI300X. AMD says the chip outperforms Nvidia’s H100 in certain workloads, but Nvidia disputes that claim, saying AMD’s testing is incomplete. Intel also has its own server chips and continues to improve their capabilities.
Nvidia’s customers are also increasingly looking to develop their own specialized AI chips to reduce their dependence on Nvidia’s products. Amazon, Google, Meta, Microsoft, and Tesla (TSLA) are just a few of the major companies currently offering or actively developing their own AI chips.
These chips are specifically designed for each company’s needs and offer increased efficiency and power consumption compared to Nvidia’s more general-purpose chips. However, NVIDIA is not taking this threat silently. According to Reuters, the company has met with Alphabet, Amazon, Meta, Microsoft and OpenAI to discuss building custom chips.
In addition to its rivals, Nvidia continues to battle U.S. restrictions on exports of its most powerful chips to China. Although the company says the ban will not affect its financial position at this time, it has expressed concern that the move could cause it to miss out on potential future sales opportunities.
Daniel Howley I’m the technology editor at Yahoo Finance. He has been covering the technology industry since his 2011. You can follow him on Twitter. @Daniel Howley.
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