Nvidia profits are coming. Why sourcing is key to inventory.
Nvidia is likely thriving despite recent uncertainties in the AI space, from OpenAI’s executive turmoil to the U.S. government’s tightening of chip export restrictions.
The big question is what management will say about its progress in easing supply constraints to meet growing demand when the company reports earnings after Tuesday’s close.
The Wall Street consensus estimate is that Nvidia (ticker: NVDA) will report October quarter revenue of $16.2 billion and adjusted earnings per share of $3.37. Analysts’ estimate for current quarter revenue is $18.0 billion.
Nvidia shares rose 2.3% to $504.20 on Monday.
Last week, Piper Sandler analyst Harsh Kumar reiterated his overweight on Nvidia shares and reaffirmed his $620 price target for the shares.
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“We believe demand from U.S. cloud and other data center customers remains strong and intact as these companies are still transforming their data centers with accelerated compute capabilities,” he said. writing. “The company’s main concern remains GPU supply.”
Nvidia dominates the market for chips used for AI applications, making it the biggest beneficiary of this trend. Its GPUs are well suited for the parallel calculations needed to train AI models and serve customers.
The company’s current high-end H100 became available in volume earlier this year and has quickly become the tech industry’s most valuable asset, as growing enthusiasm for generative artificial intelligence has created product shortages.
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Earlier this month, Nvidia announced its next major AI chip, called the H200 Tensor Core GPU, scheduled for release in the second quarter of 2024. This could create a new wave of demand.
The company is also starting to release chips at a faster pace. In October, Nvidia updated its investor presentation, showing that the chipmaker is moving from its previous two-year product cycle to a one-year cadence for AI chips. A slide in this document shows that Nvidia plans to launch additional high-end AI products in 2024 and 2025.
Write to Tae Kim at tae.kim@barrons.com
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