Nvidia is set to report its fiscal first-quarter earnings after the bell on Wednesday, with Wall Street expecting earnings per share of $5.59 and revenue of $24.65 billion. The chipmaker has seen significant growth in recent years, transitioning from a niche developer of 3D gaming hardware to a key player in the technology industry. This growth has been largely driven by demand for artificial intelligence chips from major tech companies such as Google, Microsoft, Meta, Amazon, and OpenAI.
Over the past two quarters, Nvidia’s revenue has increased by over 200%, with Wall Street anticipating a 243% surge in the first quarter compared to a year earlier. Net income is also expected to increase significantly, up more than fivefold from the previous year. However, questions have been raised about the sustainability of this rapid growth, as customers begin to focus on generating profits from their AI investments. AI software is more expensive to run than traditional software, in part due to the cost of Nvidia GPUs.
Nvidia’s current generation of AI GPUs, called Hopper, are in high demand by top AI scientists for developing chatbots, translators, and image generators. Major cloud and internet companies have been investing heavily in this technology, driving billions of dollars in sales for Nvidia. However, with the upcoming release of the next-generation AI GPUs, called Blackwell, some customers may hold off on purchasing the existing technology, leading to a potential slowdown in sales.
As Nvidia enters the fiscal second quarter, it will face tough year-over-year comparisons to the initial days of AI-driven growth. Analysts anticipate that the company’s expansion will dip below 100% in the July quarter and decelerate significantly over the following two periods. This suggests that the rapid growth seen in recent quarters may not be sustainable in the long term, as Nvidia grapples with changing market conditions and customer demands.
Despite these challenges, Nvidia’s stock price has more than tripled since the company reported fiscal first-quarter earnings last year and provided strong guidance for the second quarter. The company’s success in the AI hardware market has positioned it as a key player in the technology sector, with significant opportunities for growth in the coming years. As Nvidia continues to innovate and develop new products, investors will be closely watching how the company navigates the evolving landscape of artificial intelligence and maintains its competitive edge in the industry.
