Nvidia (NVDA) is scheduled to report first-quarter earnings after the bell on Wednesday, which will be one of the most important reports of the year for investors.
Wall Street expects NVIDIA to report revenue and profits up more than 200% and 400%, respectively, from a year ago as demand for chips soars amid the AI boom.
Analysts expected adjusted earnings per share to total $5.65 and revenue of $24.69 billion, according to Bloomberg data. The company reported revenue of $7.19 billion and adjusted EPS of $1.09 in the year-ago period.
Nvidia stock has soared over the past year, rising more than 200%. The stock has increased nearly 700% since the stock market low in October 2022.
Most of Nvidia's revenue comes from its data center business, which is expected to increase $21 billion from $4.28 billion in the first quarter of last year.
Revenue from the games division, once the company's largest division, is expected to be $3.5 billion, up from $2.24 billion a year earlier.
Ahead of Nvidia's earnings release, Stifel analyst Reuben Roy raised his price target on the company to $1,085 from $910 and said he expects Nvidia to again beat expectations on revenue and earnings and raise his earnings outlook for the next quarter.
Demand for the company's chips from hyperscalers such as Amazon (AMZN), Google (GOOG, GOOGL), Meta (META) and Microsoft (MSFT) is driving the company's results, and Wednesday's report shows the industry's focus on further AI. This is an important check to confirm your motivation. investment.
And as Yahoo Finance's Josh Schafer reported on Tuesday, AI trading goes beyond technology, with investors turning to energy and utility companies as an offshoot of the AI boom.
But Roy, along with analysts at Bank of America Global Research and Loop Capital, said short-term concerns remain about how much Nvidia's transition from its current Hopper AI chip line to the Blackwell line will affect overall sales.
The concern is that customers will put some of their Hopper chip orders on hold while they wait for Nvidia to roll out more powerful Blackwell products. The Financial Times reported Tuesday that Amazon has suspended some orders from Nvidia as it waits for the release of more advanced Blackwell chips.
Loop Capital's Ananda Barua argued that Nvidia may not allow the company to put its Hopper orders on hold without losing its position in the queue to buy Blackwell chips. If many customers put their orders on hold in favor of Blackwell chips, Nvidia's revenue could temporarily decline from the previous quarter.
Nvidia is also dealing with the threat of customers building their own AI chips in-house.
So far, Amazon, Google and Microsoft are using or working towards their own AI chips that offer better power efficiency than Nvidia's offerings.
That doesn't mean those companies will abandon Nvidia chips entirely, but a push for their own products could reduce the chip giant's market share. AMD (AMD) and Intel (INTC) are gaining momentum with their own AI chips.
For example, Microsoft announced Tuesday during its Build conference that it will begin making AMD's MI300X chips available to developers looking to train and deploy AI models. However, the Windows maker made sure to point out that it also uses chips from Nvidia.
Email Daniel Howley at dhowley@yahoofinance.com. Follow us on Twitter. @Daniel Howley.
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