Nvidia Stock Falls Before Key Q1 Earnings


Nvidia (NASDAQ:NVDA) stock retreated from its record high on Wednesday ahead of its first-quarter earnings report scheduled for release after the bell. This report is anticipated to be highly significant for investors, as Nvidia has been pivotal in driving the AI boom that has influenced markets over the past 18 months.

Wall Street analysts expect Nvidia to announce revenue and profits that have surged by more than 200% and 400%, respectively, compared to the prior-year period, fueled by the increasing demand for its chips amid the AI boom.

According to data from Bloomberg, analysts predict adjusted earnings per share to reach $5.65 on revenue of $24.69 billion. In the same quarter last year, the company reported adjusted EPS of $1.09 on revenue of $7.19 billion.

Nvidia’s stock has witnessed remarkable growth over the past year, soaring by over 200% and closing at a record high on Tuesday. Since the stock market lows in October 2022, the stock has surged by nearly 700%. Shares were down approximately 0.4% in early trade on Tuesday.

The majority of Nvidia’s revenue is expected to come from its Data Center business, projected to reach $21 billion, up from $4.28 billion in Q1 last year. Meanwhile, the Gaming division, previously the 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 release, Stifel analyst Ruben Roy raised his price target on the company’s shares to $1,085 from $910, expressing confidence that Nvidia will exceed expectations and raise its guidance for the next quarter.

Demand for Nvidia’s chips from hyperscalers like Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG, GOOGL), Meta (NASDAQ:META), Microsoft (NASDAQ:MSFT), and others has propelled the company’s performance, making Wednesday’s report crucial to assess the industry’s appetite for further AI investment.

Despite optimism, 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 Blackwell line, which could impact overall sales. There are fears that customers may delay orders for Hopper chips while waiting for the rollout of more powerful Blackwell products.

Moreover, Nvidia faces competition from its customers building their in-house AI chips. Companies like Amazon, Google, and Microsoft are either utilizing or developing their own AI chips, potentially cutting into Nvidia’s market share. AMD (NASDAQ:AMD) and Intel (NASDAQ:INTC) are also gaining traction with their AI chip offerings.

During its Build conference on Tuesday, Microsoft announced plans to offer AMD’s MI300X chips for developers, alongside Nvidia’s chips, emphasizing its diversified approach to AI hardware utilization.

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