Nvidia: the five keys before the fiscal third quarter earnings report

The question that is asked Wall Street this Wednesday is yes Nvidia may surprise investors again with its results. It turns out that several factors are relevant before the announcement, including the sharp rise in the shares of the Artificial Intelligence firm since the last report, in contrast to the performance of other chip manufacturers.

Additionally, investors seem more focused on the future, specifically the expansion of the new chip Blackwell of the company.

The five key points to keep in mind

1. The performance of the action

Nvidia shares are up an impressive 194% so far in 2024. Since the last earnings report, the stock is up nearly 16%, while the PHLX Semiconductor Index (SOX) is down 3%. Susquehanna analyst Christopher Rolland said this outperformance sets high expectations for Nvidia’s ability to execute.

2. Estimates against internal market expectations

According to FactSet, Nvidia is expected to report revenue of US$33.1 billion for the October quarter and u$s37 billion for the January quarter.

However, unofficial market expectations (“whisper numbers”) suggest higher figures, between US$39 billion yu$s40 billion for the January quarter. Some analysts believe a forecast in the range of $39.5 billion could reassure investors, while a more conservative guidance could raise doubts.

3. Focus on profit margins

Nvidia’s tight gross margins are the envy of the industry, but they have declined slightly due to the costs associated with producing the Blackwell chip.

The market estimates an adjusted gross margin of 75.0% for the October quarter and 73.0% for the January quarter, below the 75.7% and 78.9% from previous quarters.

4. Trust in the Blackwell chip

Strategists estimate that Blackwell promises to be one of the strongest product cycles in the history of Nvidia, and even the market in general. However, some analysts warn of possible technological and logistical challenges related to its initial implementation.

Nvidia has responded to these concerns by pointing out that adjustments in engineering and production are part of the normal process in collaborating with customers.

5. Strong earnings per share (EPS) results

It is expected that Nvidia post significant growth in adjusted earnings per share (EPS), albeit at a slower pace.

Analysts project adjusted EPS of 75 centsan increase in 86% compared to the same period last year, although less than the growth of the 152% in the previous quarter and 462% of the first fiscal quarter.

This slower pace reflects more difficult comparisons, since the current results are influenced by the previous rise of artificial intelligence in graphics processors.