On Wednesday, the artificial intelligence chipmaker will release a quarterly report that is likely to influence a nervous stock market as investors assess whether the large bets placed on the latest technological fad will yield returns.
Just as has been the case since Nvidia’s chipsets became the top building blocks for AI, the expectations for the results of the company’s fiscal quarter, spanning from November to January, are extremely high.
According to FactSet Research, industry analysts are predicting that Nvidia’s revenue for that period will reach a total of $66.1 billion, a 68% increase from the previous year, while its profit is forecast to rise at an even more substantial rate of over 70%.
Over the past three years, Nvidia has consistently exceeded the targets set by analysts, often by a large margin. However, this has not always been sufficient to satisfy investors who have become increasingly doubtful about whether AI will live up to all the hype surrounding the technology.
After Nvidia delivered an outstanding performance that far surpassed analyst forecasts and CEO Jensen Huang praised the “off – the – charts” demand for the company’s latest AI processors, its stock price still dropped by 3% during the next day’s trading.
The enthusiasm intensified further in the past month as four companies leading the AI movement — , , parent Alphabet, and Facebook parent — collectively committed to spending approximately $650 billion this year to boost their AI computing power.
A significant portion of this money is expected to be allocated to purchasing more Nvidia chips needed to power AI factories, just as has been the case for much of the past three years when the company’s annual revenue soared from $27 billion to over $200 billion.
This remarkable growth has transformed Nvidia from an unassuming chipmaker valued at less than $400 billion at the end of 2022 into an AI industry leader now valued at nearly $4.7 trillion. This upward trend has made Nvidia a market – moving force, with its stock accounting for roughly 7% of the benchmark S&P 500 and being a major factor in both the closely monitored Jones Industrial Average and the tech – driven composite index.
Last October, Nvidia briefly became the first company to surpass before doubts about AI pulled its stock price back from a peak that it has not reached so far this year.
However, the sentiment could change rapidly if Wednesday’s quarterly report shows that Nvidia is building the momentum that will allow the Santa Clara, California – based company to increase its annual sales by another $100 billion this year, as analysts surveyed by FactSet Research suggest. On average, analysts also believe that Nvidia’s stock price could approach $260 this year, which would propel the company’s market value beyond $6 trillion.