Nvidia, a top supplier of AI chips, will report first-quarter results after the market closes on Wednesday, with Wall Street expecting some slowdown after early blockbuster growth.
Still, the numbers will explode for the quarter ending in April as the company's chips remain in high demand in data centers used for generative artificial intelligence.
Analysts surveyed by FactSet expect earnings per share to rise 474% to $5.22 and revenue to rise 241% to $24.5 billion. This would be down from last quarter's 765% increase in revenue and 265% jump in sales.
Meanwhile, the stock price has soared 87% so far in 2024, and is up about 200% year-on-year. Nvidia is currently his third most valuable company in the world, with a market capitalization of $2.3 trillion, behind only Apple and Microsoft. However, the stock price has been almost flat for the past two months.
After Nvidia announced new Blackwell chips in March, some analysts expected a slowdown to occur during the transition from the older H100 chips to next-generation models expected to be generally available later this year. ing.
Analysts at Bank of America warned in a note Thursday that the slowdown is a potential volatility factor for Nvidia stock after the earnings release.
BofA sees Nvidia reporting strong numbers compared to Wall Street consensus, but analysts expect the company's second-quarter guidance to be less than 10% sequential growth for the first time. .
Meanwhile, the company expects its gross profit margin to shrink from about 77% in the first quarter to a “more normalized” range of 75% to 76% in the next quarter.
“However, even if NVDA has the potential to live up to these bullish expectations, the stock could still react adversely as bears are likely to complain that: 1 ) NVDA's quarter-on-quarter sales growth rate is expected to slow to “only” 7-8% compared to the previous quarter in the second quarter (July), and has been well below the mid-teens in the past few quarters. Better than that, 2) [gross margin] “The peaks and declines are a sign of price pressure, unfavorable combinations (increasing Chinese H20 shipments and/or inferred units), slowing demand/easing supply,” the note said.
Meanwhile, BofA is optimistic about Nvidia, rating the stock a “buy” and setting a price target of $1,100, implying a 19% upside from Friday's closing price.
Morgan Stanley analysts also took a bullish view on Nvidia last month, saying that growth shows no signs of slowing down during the transition to Blackwell chips and that underlying demand remains strong.
“NVDA continues to see strong spending trends in the AI space with upward revisions in demand from some new customers such as Tesla and various sovereigns,” the analysts wrote.
Morgan Stanley also expects Nvidia to maintain its market share despite increasing competition from Intel, Huawei, Samsung and others.
“The Blackwell generation's pricing seems to be strongly competitive and reduce enthusiasm for competitive products,” it added.
This article originally appeared on Fortune.com
