The AI Revolution Takes Center Stage in Tech Earnings
As the tech industry gears up for another unpredictable earnings season, one company stands out from the rest: Nvidia (NVDA). With its shares surging over 16% in the last month, the chip giant is on track to surpass Apple as the largest publicly traded company by market capitalization.
The Blackwell Chip Frenzy
Nvidia CEO Jensen Huang sparked a frenzy when he described demand for the company’s upcoming Blackwell chip as “insane” in a CNBC interview on October 3. Since then, shares have soared roughly 18%, peaking at $130. However, reports of the Biden administration capping AI chip shipments to certain countries temporarily halted the rally.
A Difficult Position Ahead of Earnings
Nvidia’s remarkable stock performance and explosive data center sales growth over the past year have put the company in a challenging position ahead of its earnings announcement. In its fiscal Q3 2024, overall revenue skyrocketed 206% to $18.1 billion, while data center revenue rose a staggering 279% to $14.5 billion. While Nvidia isn’t facing a revenue decline, its growth will likely slow compared to the same period last year, which could spook investors.
The AI Trade: Not All Ships Rise
The AI boom hasn’t lifted all chipmakers equally. Broadcom (AVGO) has seen its shares jump 59% year to date, outpacing the broader S&P 500 (GSPC). Qualcomm (QCOM) has climbed 19%, while AMD (AMD) has added just 6% to its stock price. Meanwhile, Intel (INTC) has plummeted a stunning 55%.
The Battle for AI Supremacy
Nvidia remains the star of the show this earnings season. Investors will scrutinize signs of continued AI spending from hyperscalers like Microsoft (MSFT), Google (GOOG, GOOGL), Meta (META), and others to gauge the demand for Nvidia chips. They’ll also keep a close eye on how other chip companies perform this quarter ahead of Nvidia’s announcement.
The Wild Ride Ahead
As the earnings cycle unfolds, Wall Street will be watching closely for information about Nvidia’s Blackwell rollout and potential supply constraints. With the company’s announcement typically coming later in the cycle, it’s going to be a wild few weeks. Buckle up!
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