Finance
Nvidia’s stellar revenue streak will continue while AI spending continues to explode, Wedbush says
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Nvidia is expected to have a strong quarter despite continued AI spending, Wedbush says.
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Tech companies are still in the early stages of investing in AI hardware, increasing demand for Nvidia’s AI chips.
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Major customers like Foxconn and Supermicro are reporting gains from AI, boosting Nvidia’s prospects.
Nvidia will undoubtedly report another strong earnings quarter as the AI spending boom is in full swing, according to Wedbush Securities.
The investment firm – which has called Nvidia founder Jensen Huang the “Godfather of AI” – said it remains bullish on the chipmaker ahead of its second-quarter earnings report on August 28. $1 trillion “tidal waveAccording to Matt Bryson, Wedbush’s senior vice president of equity research, the AI spending that Wedbush previously forecast is underway, while tech companies are still in the early stages of their investments in AI hardware.
“What’s fueling this is that there’s still a lot of money being spent on the AI chips that Nvidia makes,” Bryson said in an interview with CNBC on Monday, noting that the recent sell-off in Nvidia stock came amid concerns that demand for the company’s AI chips was waning, and that there could be problems with Blackwellthe next generation GPU.
But some of Nvidia’s largest customers have reported healthy profits, partly due to increased investment in AI. Foxconn, a major buyer of Nvidia’s chips, saw its profits rise 6% last quarter, largely due to “strong growth momentum” coming from its AI servers. Supermicro, another major Nvidia customer, also saw “great” sales and exceeded revenue expectations last quarter despite missing out on earnings, Bryson noted.
“Recovery is tied to a lot of recent data that suggests AI spending is not slowing down,” he added.
The integration of AI into personal devices could also be a big boost for the semiconductor industry, as it will increase demand for AI content, Bryson predicted.
Nvidias delaying the release of its Blackwell chips probably “doesn’t matter” in the grand scheme of things, he added, assuming the company is on track to roll out the chip from now on.
‘Everyone is committed to it spending on AI via the Blackwell launch. So you have another year plus of higher AI spend,” Bryson said. “I still have a ‘buy’ rating and I think we’ll get another quarter from Nvidia, which is yet another beat and raise.” They’ve done it consistently. There just doesn’t seem to be any change in the momentum of their customer base.”
Some analysts have grown skeptical of Nvidia’s runaway success, with the stock soaring 3,021% over the past five years, as more and more tech companies have entered the AI space.
However, some analysts have argued that demand for Nvidia chips is bound to decline. Some of Nvidia’s biggest customers, such as Meta, Alphabet and Amazon, already are working on their own chips or investing in other partnersaccording to one analyst who has a long-term decline for stock.
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