NVIDIA (NVDA) will report its third-quarter results after the bell next Wednesday, giving Wall Street its best and final look at the strength of AI trading.
The world’s largest publicly traded company by market capitalization, Nvidia’s stock price has continued to soar throughout 2024, driven by the explosive growth of AI in the technology landscape and the beyond. Nvidia shares are up 189% year-to-date as of Friday, easily outpacing all of the company’s chip competitors. AMD (AMD), Nvidia’s closest competitor, has seen its stock price drop nearly 8% since the start of the year, while Intel (INTC), which is facing a difficult recovery, saw its stock plunge by 51%.
Nvidia is expected to report third-quarter earnings per share (EPS) of $0.74 on revenue of $33.2 billion, according to analyst estimates compiled by Bloomberg. This equates to an 83% year-over-year increase in revenue and net income compared to the same period last year, when Nvidia reported $0.40 EPS on a turnover of 22.1 billion dollars.
Nvidia’s Data Center segment, its largest business, is expected to bring in $29 billion for the quarter. This represents a 100% increase from the $14.5 billion the company reported in the third quarter of last year.
Gaming revenue is expected to reach $3 billion, up 7% from last year, when the segment brought in $2.8 billion.
Analysts expect gross margins to reach 75%.
Investors will not only be watching to see if Nvidia beats on the bottom line and bottom line for the quarter, but also if it raises its outlook for the fourth quarter. Analysts expect Nvidia to report fourth-quarter revenue of $37 billion in the next quarter.
Even though the report and outlook are great, shares could still fall after the earnings announcement. Nvidia beat earnings and earnings expectations and topped expectations in the second quarter, but shares fell another 6% immediately after announcing its results.
This could have been a sign that some investors were unimpressed with Nvidia’s performance compared to previous quarters, where revenue increased 200% and EPS increased almost 600%. Or it could simply come down to investors making profits on their current gains.
Investors will also be on the lookout for insights from CEO Jensen Huang on Nvidia’s line of next-generation Blackwell AI chips, which are used to both train and run AI applications. During the company’s most recent earnings conference call in August, Huang said Blackwell’s production would resume in the fourth quarter, when he expects to see several billion dollars in revenue from chips.
At the time, Huang said demand for Blackwell was already outstripping supply and he expected that to continue in the coming year. Additionally, he said the company’s Hopper chip, the predecessor to the Blackwell line, is expected to continue selling over the next quarter.