Nvidia, the US chipmaker, is poised to announce its quarterly sales have more than doubled on Wednesday, even as year-on-year growth slows. Wall Street anxiously awaits what has become one of the most closely watched earnings reports in the world.
Analysts forecast Nvidia will report $28.7bn in revenue for the quarter, representing an increase of over 100 per cent from the previous year. However, this would signify a significant deceleration from the prior quarter, when revenue growth reached an astonishing 262 per cent, driven by an insatiable demand for its chips powering the wave of AI innovation.
Investors will be paying close attention to how much the delay in Nvidia’s next-generation Blackwell chips could hinder its remarkable growth story. The company has quickly become a bellwether for investors seeking signs of a potential slowdown in the months-long AI spending boom.
This has created the potential for market volatility surrounding the announcement from a stock that has been responsible for more than a quarter of the year-to-date gains in the S&P 500. There are indications that some investors are already preparing for broader reverberations from Wednesday’s release.
According to data from Citi, options markets were pricing in a 1.3 per cent swing in the S&P 500 for the first day of trading after Nvidia publishes its results, equivalent to the expected volatility for next month’s Federal Reserve meeting. Options were pricing in a swing of up to 10 per cent in either direction for Nvidia’s stock.
Nvidia’s shares have surged more than 160 per cent this year, but its performance has been more volatile in recent weeks as investors have reassessed some of their bets on AI-linked stocks. IT and consumer discretionary stocks, which include tech giants Amazon and Tesla, have been two of the worst-performing sectors in the S&P 500 in the third quarter.
During a recent market sell-off, Nvidia hit a low point 35 per cent below its all-time high. By last Friday, it had recovered most of the losses but still remained 8 per cent below its record.
Despite these concerns, there has been little indication that the AI spending spree by the likes of Google, Microsoft, Meta, and Amazon is slowing down. As a result, many analysts anticipate another strong quarter for Nvidia.
The continued emphasis on spending with little guidance on when it will translate into earnings and productivity growth has spooked some investors who were already worried that valuations among large tech groups had become stretched.
The upcoming results will provide insight into the ongoing impact of the AI chip boom on Nvidia’s performance and the potential consequences of the Blackwell delay. As the company continues to navigate the rapidly evolving AI landscape, investors will be closely monitoring its ability to maintain its growth trajectory and capitalise on the increasing demand for its cutting-edge technology.
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