AI giant Nvidia (NVDA) is scheduled to report its second-quarter earnings after the bell on Wednesday. Nvidia’s announcement — the most anticipated results of the quarter — will have a ripple effect across the tech sector as investors look for signs that the AI business will continue to dominate market conversations in the second half of the year.
Nvidia shares are up more than 163% year-to-date and 60% in the past six months. Rival AMD’s (AMD) stock is up 9% year-to-date and down about 14% in the past six months.
Shares of Intel (INTC) are down 57% year-to-date and are down 53% in the past six months as the company continues to grapple with the massive restructuring it is undergoing.
For the quarter, Nvidia is expected to report adjusted earnings per share (EPS) of $0.65 on revenue of $28.7 billion. That would represent a 139% jump in EPS and a 113% increase in revenue compared to the year-ago period, when Nvidia saw EPS of $0.27 and revenue of $13.5 billion.
Nvidia is the global leader in AI chip design and software, controlling between 80% and 95% of the market, according to Reuters. And it’s expected to maintain that lead as it begins rolling out its next-generation Blackwell chips.
While The Information reported on a possible delay in Blackwell’s shipments, analysts at firms including Goldman Sachs, KeyBanc and Loop Capital don’t think this will be a major issue for Nvidia in the short term.
“Our work suggests that Blackwell is in fact delayed, as we first wrote on [Aug. 8]it could be more like 120 days instead of 90 days…although it might not matter that much [1)] TSMC’s hopper yields continue to improve and [2)] “The amount of increased Hopper production in the fall could exceed the amount of Blackwell lost to the pushout,” Ananda Baruah, managing director of Loop Capital, said in an investor note.
For the quarter, Nvidia’s all-important data center business is expected to generate $24 billion in revenue, up 142% from the $10.3 billion the segment saw in the year-ago quarter. Wall Street is expecting Nvidia to not only beat its Q2 guidance but also raise its Q3 forecast, something that could be bolstered by TSMC’s recent earnings beat. TSMC makes chips for Nvidia.
However, that jump in data center growth is lower than the 426% revenue growth in the previous quarter and the 408% in the fourth quarter of last year.
That growth is expected to slow further in the third quarter, when the company is expected to report data center revenue of $27.7 billion, up 91% year-over-year.
“We think Nvidia will generate close to $30 billion in data center revenue in October. And so, you know… the law of large numbers [is] here,” Stifel CEO Ruben Roy told Yahoo Finance on Monday. “But we think, again, the profitability of the company will continue to grow.”
Nvidia’s rivals aren’t resting on their laurels either. Last week, AMD announced it was acquiring ZT Systems in a deal valued at $4.9 billion. The move gives AMD more firepower to build AI system servers, something that’s been a major catalyst for Nvidia’s own sales.
And while it may give AMD a sales boost, it doesn’t mean Nvidia won’t face any major threats to its position as AI king anytime soon.
“There are emerging competitors like AMD that are starting to take a little bit of market share,” Roy said. “But when you look at the overall infrastructure spending cycle … which we think will continue to accelerate, Nvidia seems to us to be best positioned to take advantage of [spending].”
In addition to the AI revenue, Nvidia is also expected to report $2.7 billion in gaming revenue. Gaming was once Nvidia’s primary revenue driver, but has become a much smaller part of its story. Still, the segment is much larger than Nvidia’s other businesses, which include professional visualization and automotive.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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