Nvidia Corp.NVDA, Financial), a chipmaker and leader in computer processors and graphics, is expected to report third-quarter results on November 20, marking one of the last major technology earnings announcements of the year. The stock, which is up more than 200% over the past year, remains a Wall Street favorite, largely due to its central role in addressing the need for AI and data processing. Notably, highly regarded industry analyst Toshiya Hari of Goldman Sachs remains bullish on Nvidia, with the stock currently trading at a lower price-to-earnings ratio than its historical average, putting the company well-positioned for continue its outperformance.
Analyst Hari estimates that Nvidia’s revenue in emerging business areas will reach around $1 billion for the October quarter (fiscal fourth quarter), assuming supply remains stable and Blackwell GPUs are in full production this quarter. Demand for cloud services from customers like Alphabet (GOOG, Financial), Microsoft (MSFT, Financial) and Amazon (AMZN, Financial) remains strong, even if execution is limited by supply constraints. For example, Microsoft expects Azure revenue to increase in the second half of FY25, post-COVID, as additional capacity becomes available.
Buoyed by positive AI market growth prospects, rival Advanced Micro Devices recently raised its forecast for the AI accelerator market to $500 billion by 2028. Hari acknowledges the potential risks of a Slower AI adoption rate, which could impact infrastructure spending. , he considers that a short-term cyclical correction is minimal. Nvidia is expected to continue expanding into various AI use cases in the coming quarters.
This article first appeared on GuruFocus.