All eyes are on Nvidia as the company prepares to report financial results. Here’s what to expect
LOS ANGELES (AP) —
Nvidia led the artificial intelligence boom to become one of the stock markets the largest companiesas tech giants continue to spend heavily on the enterprise chips and data centers needed to train and operate their AI systems.
The company is now worth over $3 trillionwith its dominance as a chipmaker reinforcing Nvidia’s place as the poster child of the AI industry ahead of the release of its latest financial results after the close of trading on Wednesday.
Wall Street expects the company to report adjusted earnings of 65 cents a share in the second quarter, up from 27 cents a year ago. Revenue is expected to have jumped to $28.74 billion, more than double what it earned in the same quarter a year ago. By comparison, S&P 500 companies are expected to report just 5% revenue growth in the quarter, according to FactSet.
The problem, critics say, is that this meteoric growth has sparked too much euphoria among investors. In the first six months of the year, Nvidia’s stock soared nearly 150%. At that point, the stock was trading at just over 100 times the company’s trailing 12-month earnings. That’s much more expensive than it has been historically and than the S&P 500 overall. That’s why analysts are warning of a selloff if Wall Street sees any sign of waning demand for AI.
Demand for generative AI products that can compose documents, create images and serve as personal assistants has driven sales of Nvidia’s specialized chips over the past year. Over the past three quarters, Nvidia’s revenue has more than tripled on a year-over-year basis, with the vast majority of the growth coming from its data center business.
The Santa Clara, California-based company has jumped to the early lead in the race for AI applications, thanks in part to founder and CEO Jensen Huang’s successful bet on the chip technology used to power the industry. The company is no stranger to big bets. Nvidia’s invention of the graphics processing unit, or GPU, in 1999 helped fuel the growth of the PC gaming market and redefine computer graphics.
