Nvidia (NVDA) is set to release its Q3 earnings after the market closes next Wednesday, giving investors a fresh insight into the company’s dominance in the AI sector and its ongoing growth trajectory.
Stellar Stock Performance in 2024
Nvidia, the world’s largest publicly traded company by market capitalization, has seen its stock surge 189% year-to-date as of Friday. This performance outpaces all of its semiconductor competitors. In comparison, AMD (AMD) shares are down nearly 8% year-to-date, while Intel (INTC) has faced significant struggles, with its stock plummeting 51%.
Earnings Expectations
Analysts estimate Nvidia will report Q3 earnings per share (EPS) of $0.74 on revenue of $33.2 billion. This represents an impressive 83% increase year-over-year from Q3 last year, when EPS was $0.40 on revenue of $22.1 billion. The company’s Data Center segment, its largest revenue driver, is projected to bring in $29 billion, marking a 100% increase from $14.5 billion in Q3 2023. Gaming revenue is anticipated to reach $3 billion, a 7% rise from the $2.8 billion reported a year prior. Gross margins are expected to hit 75%.
Q4 Guidance and Investor Reactions
Investors are keenly watching not only for a potential earnings beat but also Nvidia’s guidance for Q4. Analysts currently expect Nvidia to forecast $37 billion in revenue for the next quarter. Despite strong Q2 results that exceeded forecasts, Nvidia’s stock fell 6% immediately after, suggesting that investors may be wary of previous sky-high expectations or were taking profits.
Blackwell Chip Line and CEO Insights
Investors will seek any updates from CEO Jensen Huang about Nvidia’s next-generation Blackwell AI chips. In the company’s August earnings call, Huang mentioned that production for Blackwell would ramp up in Q4, with several billions of dollars in expected revenue. He highlighted that demand for Blackwell was already surpassing supply, a trend he anticipates will continue. Additionally, Nvidia’s previous-generation Hopper chips are expected to remain in demand moving forward.
Challenges Ahead: Potential Tariffs and Costs
Nvidia’s future could face hurdles as President-elect Trump has proposed broad tariffs on products from various countries. He has also hinted at tariffs on chips manufactured in Taiwan as an alternative to the CHIPS Act aimed at boosting US-based semiconductor production. Given that Nvidia relies heavily on TSMC in Taiwan for chip manufacturing, tariffs could impact pricing strategies and margins, potentially leading to higher prices for customers. Investors will be keen for any commentary from Huang regarding how Nvidia plans to navigate these potential policy changes.