Noah Berger/Getty Images; Jenny Chang-Rodriguez/BI; Chelsea Jia Feng/BI
Nvidia is scheduled to report its second-quarter earnings after Wednesday's closing bell.
It's quarterly performance has been a bellwether for the strength of the AI trade.
Supply-chain issues and already soaring hype has generated some caution heading into the event.
Nvidia is scheduled to release its second-quarter earnings report on Wednesday, and stakes are high for the leading artificial intelligence name. While the bulls are gearing up for another blowout performance, some analysts have been more cautious.
Anticipation is high as the chipmaker has essentially become a bellwether for the wider AI trade, and negative or positive surprises have the potential to rock the market.
Past quarters have earned Nvidia a reputation for estimate-beating earnings, as the tech industry has embraced its hardware as the bread-and-butter of the AI buildout.
Yet, in recent months, Wall Street has begun to wonder how long the AI hype can last. Nvidia's demand and sales metrics will offer a meaningful clue — any pullback could be a worrying sign for tech-focused investors.
Supply-side concerns have also mounted around Nvidia's much-awaited Blackwell AI chip, given reports that it's been delayed.
Here is what Wall Street is saying ahead of Nvidia's earnings, which will be published after the closing bell.
Goldman Sachs sees AI demand staying strong, fueling another big quarter.A bicyclist drives past a sign outside of a Nvidia office building in Santa Clara, Calif., Wednesday, May 31, 2023. (AP Photo/Jeff Chiu)
Jeff Chiu/AP Photo
Goldman analysts led by Toshiya Hari expect Nvidia's revenue and earnings-per-share to beat estimates, as the firm's fundamentals will support more upside.
Strength will come from data center revenue and the company's strong operating leverage, Goldman said. Meanwhile, the bank cited that Nvidia's hardware is still sought after by leading cloud service computers, and the firm maintains its competitive lead in the AI computing sector.
For investors concerned that AI spending has not yet yielded meaningful results, Nvidia's earnings should combat this narrative, Goldman said.
"We expect Nvidia management to provide ROI metrics available from select customers on this upcoming earnings call as a way to instill confidence in investors," Hari wrote.
However, investors should anticipate some immediate volatility, Hari wrote, given the Blackwell chip delay.
But this will be a short-term headwind, and Nvidia does not lack solutions. The impact will depend on three factors: the delay's extent, whether customers are willing to take on the older Hopper chip, and Nvidia's capacity to ramp up production of a simplified Blackwell model.
Goldman holds a "Buy" rating on Nvidia and a price target of $135 per share.
Nvidia's 2nd-quarter consensus revenue estimate is $28.86 billion.
SECOND QUARTER
Revenue estimate $28.86 billion
Data center revenue estimate $25.08 billion
Gaming revenue estimate $2.79 billion
Professional Visualization revenue estimate $451.1 million
