Finance
Nvidia reports second-quarter results on Wednesday in a major test for AI trading
AI giant Nvidia (NVDA) will report its second-quarter earnings after the bell on Wednesday. Nvidia’s announcement – the most anticipated results of the quarter – will send a ripple effect across the technology sector as investors look for signs that the AI business will continue to dominate market conversations in the second half of the year.
Nvidia stock is up more than 163% year to date and 60% in the past six months. Rival AMD’s ( AMD ) stock price is up 9% so far this year and down about 14% over the past six months.
Shares of Intel (INTC) have tumbled 57% since the start of the year and are down 53% in the past six months as the company continues to struggle with its massive corporate turnaround efforts.
For the quarter, Nvidia is expected to report adjusted earnings per share (EPS) of $0.65 on revenue of $28.7 billion. That equates to a 139% increase in earnings per share and a 113% increase in revenue compared to the same period a year ago, when Nvidia saw earnings per share of $0.27 and revenue of $13.5 billion.
Nvidia is the global leader in AI chip design and software, controlling between 80% and 95% of the market. according to Reuters. And it’s expected to continue to maintain that lead as it begins rolling out its next generation of Blackwell chips.
And while The information has reported on a possible delay in Blackwell shipments, analysts from companies like Goldman Sachs, KeyBanc and Loop Capital don’t see that as much of a concern for Nvidia in the near term.
“Our work suggests that Blackwell has in fact been delayed, as we first wrote [Aug. 8]it could be more like 120 days versus 90 days…although it might not matter that much [1)] TSMC’s hopper yields continue to improve and [2)] The amount of increased Hopper production during the fall could exceed the amount Blackwell lost due to the pushout,” Loop Capital managing director Ananda Baruah said in an investor note.
For the quarter, Nvidia’s all-important data center business is expected to generate $24 billion in revenue, up 142% from the $10.3 billion the segment saw in the same quarter last year. Wall Street expects Nvidia to not only beat second-quarter expectations but also raise third-quarter expectations, something that could be supported by TSMC’s recent earnings results. TSMC produces chips for Nvidia.
However, that jump in data center growth is lower than the 426% revenue growth last quarter and 408% in the fourth quarter of last year.
That growth is expected to slow further in the third quarter, when the company is expected to post data center revenue of $27.7 billion, up 91% year over year.
“We think Nvidia will generate nearly $30 billion in data center revenue in October. And so, you know… the law of large numbers [is] here,” Stifel CEO Ruben Roy told Yahoo Finance on Monday. “But again we think the company’s profitability will continue to grow.”
Nvidia’s rivals are not resting on their laurels either. Last week, AMD has announced that it will acquire ZT Systems in a deal worth $4.9 billion. The move gives AMD more firepower to build out AI system servers, something that has been a major catalyst for Nvidia’s own sales.
And while it could give AMD a revenue boost, it doesn’t mean Nvidia will face any major threats to its reign as AI king anytime soon.
“There are emerging competitors like AMD that are starting to take a little bit of market share,” Roy said. “But when you look at the overall infrastructure spending cycle… which we think will continue to rise, Nvidia seems to us to be best positioned to benefit from [spending].”
In addition to AI revenue, Nvidia is also expected to report gaming revenue of $2.7 billion. Once Nvidia’s main source of revenue, gaming has become a much smaller part of Nvidia’s story. Still, the segment is by far larger than Nvidia’s other businesses, including professional visualization and automotive.
email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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