Nvidia Expected to Post Stellar Earnings Again. Future Comparisons Will Be Tougher.Published: May 22, 2024 at 12:02 a.m. ET
By
Bill Alpert
comments
0
Nvidia makes the chips that power artificial intelligence. CEO Jensen Huang displays his wares during a recent artificial intelligence conference. JOSH EDELSON/AFP/GETTY IMAGES
- Email icon
- Facebook icon
- Twitter icon
- Linkedin icon
- Flipboard icon
- Reprint
- Print icon
- Resize icon
Referenced Symbols
Listen to article
Length3 minutes
The April quarter results that Nvidia reports late Wednesday are sure to wow. Relish them, because it may be Nvidia’s last insanely great earnings comparison for a bit.
That’s because the April 2023 quarter was Nvidia’s last flat sales period, before demand for its artificial intelligence chips ignited and sent the company’s market capitalization flying fourfold to $2.4 trillion.
A rough pattern seems at work. Nvidia’s AI architecture has doubled in processing power every six months. The newest accelerator design, shown in March by CEO Jensen Huang, can buzz through AI’s hardest training sets four-times faster than Nvidia’s current chips.
Analysts project that sales jumped almost fourfold in the April 2024 quarter, to $24.6 billion, with earnings up fivefold, to $5.60 a share. The company’s own guidance has been for sales between $23.5 billion and $24.5 billion.
So Nvidia’s business is scaling in line with its chips’ power. No wonder the stock closed Tuesday at a record level of $953.86.
The quarter is the first since Nvidia introduced its Blackwell accelerator architecture at a March developers conference. Those chips won’t ship in volume until later this year, so the April report will reflect the still heated demand for Nvidia’s current chip known as Hopper. Analysts will listen for how the company has been doing in ramping up production of Hopper product and shortening lead times for customer deliveries.
Over 80% of Nvidia sales are going to cloud data centers these days. Microsoft and Facebook -parent Meta Platforms were big buyers in 2023. Amazon.com has been buying big this year. Oppenheimer analyst Rick Schafer thinks that data center sales jumped more than 400% in the April period.
Competition in AI infrastructure is furious among Microsoft, Amazon, the Google unit of Alphabet, and others. So Wall Street is comfortable that demand for Hopper products won’t taper, while Nvidia and its customers shift to the new Blackwell architecture. Investors will look for that to be confirmed when Huang and his colleagues discuss their outlook on Wednesday.
With its trajectory so steep, Nvidia tends to only give guidance one quarter ahead. Wall Street’s consensus forecast for July quarter revenue is $26.6 billion. That would be a nice doubling, over the prior year, but less than the 3.5-times growth that analysts expect to hear for the April quarter.
Even if Nvidia’s climb becomes a little less steep for the next few quarters, its lead over AI acceleration rivals looks secure.
“There is no match to Nvidia’s products offering this year and next,” wrote Baird analyst Tristan Gerra, in a Monday note that raised his target price from $1,050 to $1,200.
Write to Bill Alpert at william.alpert@barrons.com |
