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We’re rolling into what’s expected to be another wild tech earnings season, and you can bet AI will take center stage. And if there’s one company everyone is watching, it’s Nvidia (NVDA).
The chip giant’s shares have risen more than 16% in the past month, and the stock is currently on track to dethrone Apple as the largest publicly traded company by market capitalization.
The jump comes after Nvidia CEO Jensen Huang said demand for the company’s upcoming Blackwell chip is “insane” during an interview with CNBC on October 3. Since then, Nvidia shares have risen about 18%, reaching a high of $130. But according to reports that the Biden administration will place a limit on the number of AI chips that can be shipped to certain countries, the rally will be suspended on Tuesday before recovering some ground on Wednesday.
Nvidia’s incredible stock performance and meteoric rise in data center sales over the past year have put the company in a tough position for its upcoming earnings announcement, which it has yet to officially schedule.
In the company’s third fiscal quarter of 2024Total revenues rose 206% to $18.1 billion, while data center revenues rose a whopping 279% to $14.5 billion. And while Nvidia doesn’t expect a drop in revenue, growth is likely to slow from the same period last year, which could deter investors.
Don’t you believe me? Just look at what happened after the company reported second-quarter earnings in August. While the company outperformed on revenue and earnings per share, with data center revenue rising 154% year over year to $26.3 billion, Nvidia shares still fell more than 6% immediately after the announcement. It took more than a month for the company’s share price to recover.
The AI trade hasn’t delivered all the ships either. Shares of Broadcom (AVGO) are up 59% this year, outpacing the broader S&P 500 (GSPC), which is up 21%. Qualcomm (QCOM) climbed 19% and AMD (AMD) added just 6% to the stock price. Intel (INTC), meanwhile, fell a stunning 55%.
Broadcom is benefiting from its involvement in AI infrastructure, connecting servers and the like, while Qualcomm is seen as a potential beneficiary of the growth of AI on devices through AI smartphones and AI PCs. AMD takes on Nvidia and serves as an alternative, both in terms of price and availability.
Then there’s Intel, which is struggling with its massive efforts, including expanding its third-party chip manufacturing capabilities and trying to catch Nvidia and AMD in the AI processor space.
But Nvidia is still the absolute star of the show this earnings season. Investors will look for signs of continued AI spending from hyperscalers like Microsoft (MSFT), Google (GOOG, GOOGL), Meta (META) and Amazon (AMZN), which make up a large portion of AI sales, to drive a to get an idea of how well Nvidia chips are selling.
They will also look at how other chip companies are performing this quarter ahead of Nvidia’s announcement, which typically occurs much later in the earnings cycle than its contemporaries.
Wall Street will similarly be on the lookout for information on Nvidia’s Blackwell rollout and whether the company faces supply constraints as it did with its Hopper chips. Either way, it’s going to be a wild few weeks. Buckle up.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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