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Nvidia is predicted to report on Wednesday that its quarterly revenue greater than doubled, at the same time as growth slowed from a 12 months ago, as Wall Street prepares for considered one of the world's most closely watched quarterly reports.
Analysts forecast the U.S. chipmaker will report revenue of $28.7 billion for the quarter, up greater than 100% year-on-year. Still, that might be a big slowdown from the previous quarter, when revenue growth reached a whopping 262 percent, driven by insatiable demand for its chips which are powering a wave of AI innovation.
Investors might be paying particular attention to how a delay within the launch of Blackwell's next chips could impact the corporate's phenomenal growth story.
Nvidia has quickly turn out to be a bellwether for investors expecting signs that the months-long boom in AI spending could also be waning, creating the potential for market volatility across the announcement of a stock that has accounted for greater than 1 / 4 of the S&P 500's year-to-date gains.
There are signs that some investors are already bracing for a much bigger impact from Wednesday's release. According to data from Citi, options markets last week had priced in a 1.3 percent swing within the S&P 500 for the primary day of trading after Nvidia's earnings release – the identical expected volatility because the Federal Reserve meeting next month. Options had priced in a swing of as much as 10 percent in either direction for Nvidia stock.
Nvidia shares have risen greater than 160 percent this 12 months, but their performance has been more volatile in recent weeks as investors have reassessed a few of their bets on AI-related stocks. Information technology and consumer goods stocks – which include tech giants Amazon and Tesla – were two of the worst-performing sectors within the S&P 500 within the third quarter. At its low point during a recent market sell-off, Nvidia was 35 percent below its all-time high. By last Friday, it had recouped many of the losses but was still 8 percent below its record.
“I feel there's been an actual turnaround and disillusionment” in among the more extreme AI bets, said Dec Mullarkey, managing director at SLC Management. “If they disappoint in any way, that could lead on to a fairly significant correction and spillover.”
Despite these concerns, there are few signs that the AI spending spree by firms like Google, Microsoft, Meta and Amazon is abating, and lots of analysts expect one other strong quarter for Nvidia.
There are some potential hurdles, nevertheless. The launch of Nvidia's next-generation GPU, generally known as Blackwell, has been delayed by production complications at partner TSMC. Nvidia CEO Jensen Huang said at the corporate's last earnings call in May that he expects Blackwell to contribute “lots” to revenue this 12 months.
Citi analysts said last week that investors would deal with demand for Nvidia's current generation of Hopper chips, which could offset any impact from delays at Blackwell.
HSBC analysts said they don’t expect “material downside risks” to the corporate's earnings in 2025 and 2026 attributable to the Blackwell chip delay. They also expressed optimism about upcoming results, saying they expect revenue to again beat expectations and reach $30 billion.
Earnings from the massive tech firms racing for AI dominance provide a glimpse into the spending spree that has benefited Nvidia. In its quarterly leads to July, Google reported one other increase in its capital spending, rising to $13 billion for the quarter ending June, partly attributable to ongoing spending on Nvidia chips. Meta, Microsoft and Amazon also said they plan to proceed spending heavily on AI.
The continued deal with spending without much indication of when it could translate into profit and productivity growth spooked some investors who were already concerned that valuations of the massive technology firms were stretched.
Spending by a small group of enormous AI “hyperscalers” accounts for nearly half of the revenue of Nvidia’s data center business, which has quickly turn out to be the corporate’s primary income.
“Everyone's biggest concern goes to be the delay at Blackwell,” G Dan Hutcheson of TechInsights told the Financial Times. “The other factor is when people start taking a look at the world and saying, 'Are (the hyperscalers) in a position to earn money from this?' Because in some unspecified time in the future they're going to must rationalize what they're doing.”
“My impression is that Nvidia investors will stay the course, especially given the strong economy and expectations of falling corporate tax rates on the macro level,” Hutcheson added.
