Nvidia (NASDAQ:NVDA) stock retreated from a record high on Wednesday ahead of its highly anticipated first-quarter earnings report, set for release after the bell. This report is expected to be pivotal for investors, as Nvidia has been at the forefront of the AI boom driving markets over the past 18 months.
Wall Street forecasts Nvidia’s revenue and profits to have surged more than 200% and 400%, respectively, from the previous year. Analysts project adjusted earnings per share of $5.65 on revenue of $24.69 billion, according to Bloomberg data. In the same quarter last year, the company reported adjusted EPS of $1.09 on revenue of $7.19 billion.
Nvidia’s stock has soared over 200% in the past year, reaching a record high on Tuesday. The stock has risen nearly 700% since the market lows of October 2022, though it was down about 0.4% in early trading on Tuesday.
The majority of Nvidia’s revenue is expected to come from its Data Center business, which is anticipated to generate $21 billion, up from $4.28 billion in Q1 last year. The Gaming division, previously its largest segment, is expected to see revenue of $3.5 billion, up from $2.24 billion in the same quarter last year.
Ahead of Nvidia’s earnings announcement, Stifel analyst Ruben Roy raised his price target for the company’s shares to $1,085 from $910, predicting that Nvidia will surpass expectations and raise its guidance for the next quarter.
The surge in demand for Nvidia’s chips from hyperscalers like Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG, NASDAQ:GOOGL), Meta (NASDAQ:META), and Microsoft (NASDAQ:MSFT) has boosted the company’s results, making Wednesday’s report a key indicator of the industry’s appetite for further AI investment. Yahoo Finance’s Josh Schafer reported that the AI trade is expanding beyond tech, with investors eyeing energy and power companies as derivative plays on the AI boom.
However, analysts, including those at BofA Global Research and Loop Capital, express concerns about the transition from Nvidia’s current Hopper line of AI chips to its upcoming Blackwell line. There is fear that customers might delay their Hopper chip orders in anticipation of the more powerful Blackwell products. On Tuesday, Amazon announced a transition to Blackwell chips for an upcoming supercomputer project after a Financial Times report suggested the company had paused some chip orders.
Loop Capital’s Ananda Baruah noted that Nvidia might not allow customers to delay Hopper orders without losing their place in line for Blackwell chips. If enough customers delay orders, Nvidia could see a temporary dip in quarter-over-quarter sales.
Nvidia is also facing competition from customers developing their own in-house AI chips. Amazon, Google, and Microsoft are either using or developing their own AI chips, which could potentially reduce Nvidia’s market share. Additionally, AMD (NASDAQ:AMD) and Intel (NASDAQ:INTC) are gaining traction with their AI chips. On Tuesday, Microsoft announced during its Build conference that it would begin offering AMD’s MI300X chips for AI model development and deployment, while also continuing to use Nvidia’s chips.
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