The most popular company in the world is back to round out tech earnings season. Money managers wait nervously as Nvidia reports its latest quarterly results Wednesday afternoon. While Wall Street expects another strong performance for the third quarter (Visible Alpha forecasts revenue to rise 84% year-over-year to $33.2 billion), all eyes are on the chip giant’s forecast for the latest quarter of the year.
That’s because the company’s next-generation GPU offering, or Blackwell, is expected to hit the bottom line. CEO Jensen Huang has touted “insane” demand for the new platform, which represents a dramatic performance boost over the so-called Hopper chips that fueled the AI boom. It’s a dramatic show of innovation and strength from a company that has seen its shares rise more than 800% in the past two years, adding more than $3 trillion in market capitalization to replace Apple as the largest company in the world.
Wedbush Securities’ Dan Ives, one of Wall Street’s most prominent tech bulls, expects another release, saying a $2 billion increase in revenue and a similar increase over Q4 guidance will indicate the AI game is just getting started .
“We expect another breathtaking surprise tomorrow from the Godfather of AI Jensen who will put jet fuel in this bull market engine,” Ives and other Wedbush analysts wrote in a note.
However, others who follow the stock are taking a more cautious note. Several analysts said this Fortune Wednesday’s call could prove to be a “sell the news” event. That’s what happened last quarter, even though the company easily exceeded earnings and revenue expectations as revenue grew more than 122% year over year.
The stock fell 18% in the week after the call, trading just above $100 as investors pocketed their gains. However, the stock is up about 40% since then. Shares rose about 4% on Tuesday, topping the $145 threshold in anticipation of another breakout.
Nevertheless, the stage could be set for another round of massive profit-taking, said Ted Mortonson, managing director and technology desk sector strategist at Baird. Retail investors, he said, often trade based on “FOMO,” or the fear of missing out. In contrast, he added, institutions are likely to be driven by what he called “FOGK.”
“That’s the fear of being killed,” he said.
With shares nearly tripling this year, he explained, his customers have won. They don’t plan to give up these gains by the end of the year.
How the stock moves after Wednesday’s call will likely have a lot to do with what the company says about Blackwell. Jensen previously said the groundbreaking platform should generate “several billions” of additional revenue starting in the fourth quarter, but Angelo Zino, vice president and senior analyst at CFRA Research, said he believes Wednesday’s forecast will be relatively conservative.
Both he and Mortonson are not surprised that Blackwell’s rollout has suffered production delays. A recent report from The Information, a technology-focused publication, said overheating problems had forced Nvidia to ask suppliers to change the design of the platform’s server racks.
Rather than simply selling standalone chips, Zino explains, Nvidia is marketing Blackwell as a platform offering with configurations that can be tailored to the needs of different customers.
“You’re talking about computing power and speeds in memory and networking that we’ve never seen before,” Mortonson said.
However, that also means there are a lot more moving parts on Nvidia’s side. Zino said delivery of some systems will likely be delayed until 2025, prompting the company to be less aggressive in issuing guidance.
“Given that more could go wrong, you want to provide a little cushion for this January quarter,” Zino said, “just in case.”
That could give Nvidia even more huge profit numbers early next year. By Nvidia’s high standards, however, Wednesday’s results and predictions might be a bit superficial. If that happens, Mortonson said, big investors could quickly sell.
Retailers, he added, take a knife to a gunfight. “It’s a casino stock,” he said, “so good luck to them.”
This story originally appeared on Fortune.com
