Finance
Nvidia revenue ‘absolutely crucial for the AI infrastructure business’
Nvidia stock (NVDA) is back. But it’s about to be tested again.
The next big event for the market is chip darling’s earnings report, scheduled for after the bell on Wednesday.
And it’s not just Nvidia stock at stake: Nvidia’s results will set the pace for other AI players.
“Nvidia’s report and guidance will be absolutely critical to the AI infrastructure business,” technology investor Paul Meeks told Yahoo Finance.
The past few weeks have been a rollercoaster ride for tech investors. Shares of AI giants Amazon (AMZN), Microsoft (MSFT) and Alphabet (GOOGL) have fallen over the past three months, with Alphabet down more than 6% and both Amazon and Microsoft down more than 3%.
And second-tier AI players are also struggling to gain traction. AMD (AMD) is down more than 16% since mid-July, while Marvell Technology (MRVL) is down almost 6% over the same period.
But strong results from Nvidia could reignite some of that lost momentum, according to Wedbush’s Dan Ives.
“Nvidia is the heart and lungs of this bullish tech trade as the AI revolution takes hold,” Ives told Yahoo Finance.
Ives, who expects a “shock and awe” quarter from Nvidia, says continued strong demand for the company’s chips will have a ripple effect across the industry. In a recent note to clients, Ives estimated that for every dollar spent on an Nvidia GPU chip, there is an $8 to $10 multiplier in the technology sector.
Bernstein’s Mark Shmulik, who serves many of Nvidia’s largest customers including Meta, Amazon and Google, told me the chip giant’s results will be a crucial driver of Big Tech’s next move.
“Nvidia is a cog in the Magnificent Seven and AI business,” Shmulik explains. “If there is any softness, the rotation out of Mag 7 may pick up a little steam, but listening to other tech revenues, the core fundamentals continue to deliver.”
So far this year, Nvidia shares have soared. Shares are up 180% in the past year and nearly 2,900% in the past five years, setting a very high bar for earnings this quarter.
Nvidia’s revenue is estimated to grow 112% in the latest quarter, marking a dramatic slowdown from more than 250% growth a year ago. For Wall Street, the consensus remains bullish. KeyBanc, Citi and Goldman Sachs were among those on the Street who reiterated their buy ratings on the stock ahead of the results this week.
While only time will tell if Nvidia lives up to the hype this earnings season, it’s safe to say the stakes are high.
Seana Smith is an anchor at Yahoo Finance. Follow Smit on Twitter @SeanaNSsmith. Tips about deals, mergers, activist situations or something else? Email seanasmith@yahooinc.com.
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