Nvidia Expected to Post Another Strong Quarter on AI Demand, Analysts Say
As anticipation of Nvidia’s (NVDA) upcoming earnings report builds, Raymond James analysts said they expect a solid quarter on demand for its artificial intelligence (AI) chips.
Strong Quarter Expected Despite Blackwell Delays
“We are looking for another strong quarter from NVDA despite the noise surrounding Blackwell delays,” the analysts said, reiterating a “strong buy” rating for the stock.
Reported delays in the Blackwell chip sent Nvidia’s stock price tumbling earlier this month, though the chipmaker has said production is on track to ramp in the second half of the year, as planned. Investors are likely to be watching for indicators of the delay’s impact in the upcoming earnings report due for release on Aug. 28.
Blackwell Delay Could Have ‘Modest’ Impact
The analysts said they anticipate a “modest” contribution from Blackwell in the fiscal third quarter and that delays could drive sales of Hopper, the Blackwell chip’s predecessor, in the near term.
They suggest that “a longer delay could increase the risk of a customer spending pause,” but added that they “have no reason to doubt” Nvidia’s capability to ship Blackwell by the end of the year.
Raymond James analysts were not alone, as other analysts have indicated worries about the impact of delays may be overblown.
No Indications of AI Demand Slowdown
The analysts said their checks with hyperscale customers and supply chain partners suggest no slowdown in demand as big tech companies ramp up spending on AI infrastructure, supporting Nvidia’s data center sales.
The analysts highlighted that Nvidia beat revenue and outlook expectations in its past four earnings reports. While Nvidia has historically outperformed analysts’ projections, the market’s expectations around the AI darlings’ performance have grown, setting an increasingly higher bar for the chipmaker.
Nvidia shares closed about 1% higher at $128.50 Wednesday. The stock has more than doubled in value since the start of the year.
Overall, the outlook for Nvidia remains positive as the demand for AI chips continues to grow. Despite the reported delays in the Blackwell chip, analysts expect a strong quarter from the company. The potential impact of the delay is expected to be modest and could be offset by increased demand for Hopper. Other analysts also believe that concerns about the delay may be exaggerated.
Nvidia’s position in the AI market is strong, with no indications of a slowdown in demand. The company’s data center sales are supported by big tech companies’ increased spending on AI infrastructure. Nvidia has consistently exceeded revenue and outlook expectations in previous earnings reports, but the market’s expectations for the company’s performance have also risen.
Investors will be closely watching Nvidia’s upcoming earnings report for any signs of the delay’s impact and to see if the company can continue its strong performance. Despite the recent stock price drop due to the delay news, Nvidia’s shares have more than doubled in value since the beginning of the year.
Overall, the future looks bright for Nvidia as it continues to lead in the AI era and capitalize on the growing demand for AI chips.
Read the original article on Investopedia.
