Nvidia reports second-quarter earnings after the US market closes on 26 August, with investors eager for insight into the health of the AI boom and the sustainability of hyperscaler spending.
Analysts expect adjusted earnings of $2.09 a share on revenue of $92bn, according to Bloomberg consensus estimates. That would represent another marked step up from the $81.6bn reported in the first quarter and would sit marginally above Nvidia’s own guidance of roughly $91bn.
Attention will centre on third-quarter guidance and on whether Nvidia believes it is ready to surpass the $100bn quarterly revenue mark.
The market will also be watching continued rollout of its Blackwell architecture and the timeline for its next-generation Vera Rubin chips.
With hyperscalers still ramping up capex, investors are keen to see how much will flow into Nvidia’s coffers over the coming year and whether those projections warrant an Nvidia share price re-rating.
There’s also rising input costs to consider, and the question of whether Nvidia can defend its margins amid a supply-demand imbalance as component prices climb. Rising memory costs are the key thing to watch here, with Micron’s ascent over the past six months indicating how much prices have increased.
Nvidia earnings have become the World Cup of the financial calendar, with each quarterly update seeming no less important than the last.
But unlike several other AI-related stocks, particularly those in infrastructure and power, Nvidia shares have traded broadly sideways for about 3 months, and its prominence in the AI equity trade has diminished.
This must not, however, be mistaken for a decline in prominence within the AI ecosystem.
The industry is moving at a rate of knots, and while other firms are increasingly attracting investor interest, it doesn’t mean Nvidia is no longer the most important player in the sector, as demonstrated by its partnerships throughout the industry.
However, as the market broadens out, scrutiny of so-called circular financing across the sector has increased, adding a new dimension to the AI trade and to Nvidia’s earnings.
Most of Nvidia’s (much smaller) peers have reacted well to earnings recently. Many of these names will have direct or indirect partnerships with Nvidia through investments and multi-year deals for their chips.
With scrutiny of these deals growing, Nvidia, more than ever, has the potential to rock the entire ecosystem with better-or worse-than-expected earnings.
AI infrastructure investment
Despite grumbles about circular funding, Nvidia has orchestrated an AI infrastructure war chest this month with six major institutions, including BlackRock and Goldman Sachs, to mobilise more than $500bn for investment in the sector.
“NVIDIA has reached an important milestone. We began by building chips; today, we are helping create a new class of productive, investable infrastructure: AI factories,” said Jensen Huang, founder and CEO of NVIDIA, as the deal was announced.
“In AI, compute is revenue. NVIDIA compute is uniquely suited for this role.”
Huang continued: “These financing platforms will help customers access scarce compute at scale and build the DSX AI factories that will power every industry and country in the age of AI.”
A lot more than Nvidia’s own plans for AI factories can be influenced by this week’s results.