What you need to know ahead of NVIDIA's First Quarter Earnings

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Topic: Industrials
Publication Type: Education
What you need to know ahead of NVIDIA's First Quarter Earnings

NVIDIA Corporation, a global leader in graphics processing units (GPUs) and artificial intelligence (AI) technology, is set to announce its first-quarter earnings, a highly anticipated event in the tech sector. As a powerhouse in the semiconductor industry, NVIDIA's performance often serves as a barometer for the broader market, influencing investor sentiment and industry trends.

With its innovative products and robust ecosystem, NVIDIA's earnings report not only reflects its own financial health but also provides insights into the state of the gaming, data center, and AI sectors. In this article, we delve into the factors shaping NVIDIA's first-quarter earnings and explore what investors should watch out for in this crucial update from one of the most influential companies in the tech landscape.

Highlights

  • NVIDIA is poised to announce its earnings for the fiscal first quarter of 2025 on 22nd May 2024 at 2:00 PM PT.
  • Investors are expected to focus on the performance of NVIDIA's data center segment, which significantly contributed to the company's earnings in the previous quarter.

In the previous earnings call, CEO Jensen Huang highlighted the significance of AI reaching a 'tipping point', which sparked substantial discussion. With NVIDIA's recent GTC conference in March exploring various future prospects, traders will now likely respond to news not yet factored into the stock price. This includes considerations such as growth prospects, sustaining its dominant market position, levels of capital expenditure, and upcoming partnerships.

NVIDIA shares saw a slight increase early on 13th May trading following significant price target adjustments by two analysts for the AI technology giant. This comes ahead of the eagerly awaited first-quarter earnings report scheduled for May 22.

Data Center Performance: A Key Metric for NVIDIA

Nvidia's data center revenue jumped to $18.4 billion a whooping 409% increase on a YoY basis. Importantly, more than half of Nvidia's data center sales were attributed to large cloud providers.

Blackwell Platform

At the GTC conference in March, NVIDIA introduced the NVIDIA Blackwell platform, which offers generative AI capabilities on trillion-parameter large language models (LLMs) with significantly reduced cost and energy consumption compared to the NVIDIA Hopper architecture. Blackwell's unveiling holds immense potential for AI workloads, with its technological prowess extending to various scientific computing applications, including conventional numerical simulation.

The implications of Blackwell are profound, as it not only enhances the efficiency of AI tasks but also facilitates groundbreaking discoveries across scientific computing realms. Through decreased energy expenditures, accelerated computing and AI are driving sustainable computing practices. Already, numerous scientific computing applications are reaping the benefits, with weather simulations experiencing a 200x reduction in costs and a 300x decrease in energy consumption. Similarly, digital twin simulations exhibit a remarkable 65x cost reduction and 58x lower energy consumption compared to traditional CPU-based systems and similar alternatives.

During the launch event, CEO Jensen Huang clarified to investors that Blackwell is not just a chip; rather, it is an entire platform. While acknowledging the excellence of Hopper, he emphasized the necessity for larger GPUs to meet evolving demands.

HSBC analyst Frank Lee highlighted NVIDIA's capacity to harness pricing power with the introduction of the new GB200 platform. Consequently, he raised his price target on Nvidia by $300 to $1,350 per share.

GB200 Platform: Pricing Overview

Lee estimates that the overall pricing for the GB200 platform falls within the range of $60,000 to $70,000 per server, which is double the cost of a stand-alone B100 processor, ranging from $30,000 to $35,000. He anticipates that this server-rack pricing could contribute to Nvidia's revenue potential for the next fiscal year, ending in January 2026, reaching $196 billion.

The stock of NVIDIA (NVDA) has experienced a remarkable surge, surpassing an 86% increase in value since the beginning of the year. This surge has resulted in the addition of over $1 trillion in market capitalization. Investors are recalibrating their earnings and revenue projections, recognizing NVIDIA's dominant role in the market for processors fueling artificial intelligence applications.

Nvidia is set to release its first-quarter earnings for fiscal 2025 after the market closes on May 22.

Sources:

  1. Nvidia
  2. Morningstar
  3. com

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