Technology
Wednesday, May 22nd, 2024 4:19 pm EDT
Key Points
- Strong Expected Earnings and Revenue Growth: Nvidia is anticipated to report first-quarter earnings per share of $5.59 and revenue of $24.65 billion, reflecting a continuation of its significant growth driven by high demand for AI chips.
- Historical Surge in Revenue and Stock Price: Nvidia’s revenue has increased by over 200% in each of the past two quarters, with an expected 243% rise in the first quarter from the previous year. This growth has caused Nvidia’s stock to more than triple since the same period last year.
- Concerns About Sustainability and Future Growth: Despite current success, there are concerns about the sustainability of Nvidia’s rapid growth due to the high costs of AI software and potential market saturation. The upcoming launch of next-generation GPUs, Blackwell, may also cause a temporary dip in sales of existing products, and analysts predict growth to slow down in the coming quarters.
Nvidia is set to report its fiscal first-quarter earnings on Wednesday after the bell, with Wall Street anticipating strong results. The consensus estimates, according to LSEG, are for an adjusted earnings per share of $5.59 and revenue of $24.65 billion. Nvidia, once a niche player in 3D gaming hardware, has rapidly ascended to a pivotal position in the technology sector, driven by the explosive demand for artificial intelligence (AI) chips from tech giants like Google, Microsoft, Meta, Amazon, and OpenAI.
Over the past year, Nvidia has consistently signaled to investors its anticipated phase of substantial growth, primarily fueled by the surge in demand for its AI chips. The company’s revenue has surged by more than 200% in each of the last two quarters, and Wall Street expects this trend to continue, with forecasts predicting a 243% increase in the first quarter compared to the same period last year. Net income is also projected to have increased more than fivefold from a year ago.
Nvidia’s share price has more than tripled since it reported fiscal first-quarter earnings last year, thanks in part to robust guidance for the subsequent quarter. The current generation of Nvidia’s AI graphics processing units (GPUs), known as Hopper, is essential for developing advanced AI applications such as chatbots, translators, and image generators. Over the past year, these GPUs have been in high demand, with major cloud and internet companies investing billions to expand their AI infrastructure.
Despite Nvidia’s impressive growth, there are concerns about the sustainability of this trajectory. The high costs associated with running AI software, largely due to the necessary investment in Nvidia GPUs, mean that many customers need to start seeing a return on their substantial expenditures. Furthermore, Nvidia is on the brink of launching its next-generation AI GPUs, called Blackwell. The anticipation of this new technology might cause some customers to delay their purchases, potentially leading to a dip in sales of the current generation of GPUs.
Looking ahead to the fiscal second quarter, Nvidia will face challenging year-over-year comparisons as it measures up against the initial phase of AI-driven growth. Analysts predict that the rate of revenue growth will fall below 100% in the July quarter and continue to decelerate in the subsequent periods. This expected slowdown highlights the pressure on Nvidia to maintain its remarkable growth trajectory in an increasingly competitive and evolving market.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/22/nvidia-nvda-earnings-report-q1-2025-.html
