Nvidia is seeing 'insatiable' demand, but these are the key questions
By Emily Bary
Ahead of earnings, investors are focused on the Blackwell ramp, prospect of an 'air pocket' and margin trends
Once again, investors will look long-term when Nvidia Corp. reports results next week.
It's pretty well-established that the company is seeing "insatiable" demand for artificial-intelligence accelerators, Oppenheimer Rick Schafer noted, adding that he and most others expect to see another beat-and-raise quarter from Nvidia (NVDA) when it reports quarterly earnings on Wednesday afternoon.
But Wall Street seems less concerned with the present as Nvidia prepares to start shipping its new Blackwell chip lineup later this year.
"The bar is quite high for NVDA, but the level of the beat-and-raise likely takes a backseat to the ramp of the GB200 NVL and next year," Jefferies analyst Blayne Curtis wrote, referring to the company's Grace Blackwell exascale computer.
Read: Nvidia CEO Jensen Huang saw his pay jump 60% last year, topping what rivals made
Plus, one term that gets thrown around in discussing Nvidia lately is "air pocket." In other words, investors want to know whether there will be a demand speed bump of sorts as customers prepare for the Blackwell launch.
"Concerns of an air pocket ahead of Blackwell was a frequent concern we heard post our launch, but we don't see any signs of that with [cloud service providers] still catching up on supply and a long tail of customers behind them who could not get product last year," Curtis wrote. "We believe the ramp of the GB200 NVL products is a large driver for the story as NVDA will once again extend their control to a greater portion of the AI system design."
But BofA Securities' Vivek Arya wrote of the potential for Nvidia shares to be "volatile" in the short term, owing in part to "quarterly deceleration ahead of Blackwell."
Arya added that, even though some investors anticipate nearly $28 billion in sales guidance for the ongoing quarter - above the consensus view of $26.5 billion - "the stock could still react unfavorably" to an outlook that meets those bullish expectations.
See also: Here's what Nvidia earnings need to show to be 'good enough' for Wall Street
That's because sequential sales growth could decelerate to somewhere in the 7% to 8% range for the July quarter, "well below the mid-teens or better [rate] the last few quarters," he wrote.
Further, investors will be monitoring gross margins to see if they peaked. Arya flagged that a "decline is a sign of pricing pressure, unfavorable mix (more China H20 shipments and/or more inference units) and slowing demand/easing supply."
Don't miss: AMD supplants Nvidia as this analyst's top chip stock - but he still likes both
-Emily Bary
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
05-17-24 1010ET
Copyright (c) 2024 Dow Jones & Company, Inc.-
These Stocks Are (Still) Powering the Bull Market
-
5 Undervalued Energy Stocks to Play the AI Data Center Demand Boom
-
After Earnings, Is Lowe’s Stock a Buy, Sell, or Fairly Valued?
-
5 Stocks With the Largest Fair Value Estimate Cuts After Q1 Earnings
-
10 Stocks With the Largest Fair Value Estimate Increases After Q1 Earnings
-
Markets Brief: Inflation Back in the Spotlight
-
AI Is Booming, but Consumer Spending Is Slowing. Which Will Prevail in the Stock Market?
-
What’s Happening In the Markets This Week
-
3 Dividend Stocks for June 2024
-
After Earnings, Is Alibaba Stock a Buy, Sell, or Fairly Valued?
-
MongoDB Earnings: Slashing Valuation as Execution and Macro to Blame for Lower Guidance
-
Marvell Earnings: We Raise Our Medium-Term AI Forecast and Bring Our Valuation Up to $75
-
Zscaler Earnings: Impressive Traction in Emerging Products Drives Sales Growth for the Quarter
-
Dell Earnings: Raising Valuation on Strong AI, but the Stock Remains Severely Overvalued
-
After Earnings, Is Nvidia Stock a Buy, Sell, or Fairly Valued?
-
The 10 Best Companies to Invest in Now