Nvidia is likely thriving despite recent uncertainty in the AI space, from management turmoil at OpenAI to the U.S. government’s tightening of chip export restrictions.
The big question is what management will say about its progress in alleviating supply constraints to meet rising demand when the company reports earnings after the close on Tuesday.
The Wall Street consensus estimate is for
Nvidia
(ticker: NVDA) to report October quarter revenue of $16.2 billion with adjusted earnings per share of $3.37. Analysts’ estimate for the current quarter’s revenue is $18.0 billion.
Nvidia shares were down 0.8% in Tuesday trading. The
iShares Semiconductor exchange-traded fund
(SOXX) is down 1.9%.
Last week, Piper Sandler analyst Harsh Kumar reiterated his Overweight rating for Nvidia stock and reaffirmed his $620 price target for the shares.
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“We believe demand from U.S. cloud and other data center clients remains strong and intact given these firms are still in the process of transforming their data centers with accelerated compute capabilities,” he wrote. “The primary concern for the company remains the supply of GPUs.”
Nvidia dominates the market for chips used for AI applications, making it the primary beneficiary of the trend. Its GPUs are well-suited for the parallel computations needed to train AI models and serve customers.
The company’s current high-end H100 became available in volume earlier this year and quickly became the technology industry’s most precious resource as rising excitement over generative artificial intelligence created product shortages.
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Earlier this month, Nvidia announced its next major AI chip, named the H200 Tensor Core GPU, which is scheduled to be released in the second quarter of 2024. It may create another wave of demand.
The company is also starting to release chips at a faster pace. In October, Nvidia updated its investor presentation, showing that the chip maker is moving from its previous two-year product cycle to a one-year cadence for AI chips. A slide in that document shows Nvidia planning to release additional high-end AI products in 2024 and 2025.
Write to Tae Kim at [email protected]
