Nvidia Poised for Another Strong Quarter Amidst AI Infrastructure Boom
Nvidia is set to announce its fiscal fourth-quarter earnings, with Wall Street anticipating continued robust performance driven by the insatiable demand for artificial intelligence infrastructure. The company is expected to report adjusted earnings per share of $1.53 on revenue of $66.2 billion, marking an impressive 68% year-over-year increase. This would extend Nvidia’s streak of consecutive quarters with revenue growth exceeding 55%, solidifying its position as a primary beneficiary of the AI revolution.
Looking ahead, analysts project this growth trajectory to persist, forecasting revenue to climb to $72.6 billion in the current quarter ending in April, representing a 65% surge. This optimistic outlook is underpinned by the substantial capital expenditures planned by the major cloud providers. Following their recent earnings reports, tech giants such as Alphabet, Amazon, Meta, and Microsoft are collectively projected to invest close to $700 billion in AI infrastructure build-outs this year.
At the heart of this expansion is Nvidia’s dominance in the AI chip market. The company’s high-performance graphics processing units (GPUs) are indispensable for the leading tech companies and burgeoning AI startups like OpenAI and Anthropic. While Nvidia initially gained recognition for its gaming graphics cards, its data center segment now accounts for approximately 90% of its revenue. This segment is expected to contribute $60.7 billion in revenue, up a remarkable 70% from the previous year.
A key factor investors will be scrutinizing is Nvidia’s gross margin, particularly in light of the global memory chip shortage. The escalating demand for AI-driven applications has outpaced supply, as highlighted by Micron’s business chief who noted that demand has “far outpaced our ability to supply that memory.” Memory is a critical component in Nvidia’s AI systems, and the company’s ability to absorb or pass on these increased costs will be a significant indicator of its pricing power and supply chain management prowess.
During its last earnings call, Nvidia projected a gross margin of around 75% for the current quarter, an increase from the approximately 73.5% reported in the third quarter. Analysts at Cantor Research are forecasting an even slightly higher margin, emphasizing that “this is clearly a focus area for investors with ongoing rack-scale ramp and rising memory pricing.” They suggest that effective “close and early supply chain collaboration” can help management mitigate the impact of rising memory costs.
Nvidia executives are scheduled to discuss these results and provide further insights during an earnings call at 5 p.m. ET.
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