Demand for Nvidia’s artificial intelligence chips is skyrocketing, and it’s no secret that supply may struggle to keep up in the near future. However, as we analyze Nvidia’s earnings results, the real question investors should be asking is whether the company is making progress in overcoming its supply constraints for the long term.
According to Wall Street consensus estimates, Nvidia is expected to report a revenue of $11.2 billion for the July quarter, with adjusted earnings per share of $2.08. Analysts are even more optimistic about the current quarter, predicting a revenue of $12.6 billion.
When it comes to AI projects, Nvidia dominates the market for producing chips. This puts them at the forefront of the generative AI trend, making them the go-to choice for start-ups and corporations alike. One particular AI project that caused quite a stir is OpenAI’s ChatGPT, which relies on Nvidia’s chips to power its chatbot capabilities.
The Power of CUDA
One of the main reasons why developers favor Nvidia’s chips is its robust software programming platform ecosystem called CUDA. For over a decade, developers have been utilizing Nvidia’s proprietary platform to build and share AI-related tools and software libraries. This vast collection of resources has made it significantly easier to develop AI applications rapidly.
With Nvidia leading the charge in developing cutting-edge AI chips and providing an extensive software programming platform, there is no doubt that they are driving innovation in the field of artificial intelligence. As we eagerly await their earnings report, let’s keep an eye out for any signs of progress in overcoming supply constraints and solidifying their position as the frontrunner in the AI industry.
Nvidia’s Revenue Limitation
Many analysts have said the current limitation on Nvidia’s revenue is advanced chip-packaging capacity at semiconductor foundries, and not demand.
Last week, Morgan Stanley analyst Joseph Moore reiterated his Overweight rating for Nvidia stock, stating that the company is meeting less than half of the current demand for its AI products. He also reaffirmed his $500 price target for the shares.
Positive Outlook for Nvidia
Nvidia is benefitting from a “massive shift in spending towards AI and a fairly exceptional supply-demand imbalance,” according to Moore. He believes that the overall trajectory of the company is more important than the exact revenue number in October guidance.
Moore predicts that Nvidia will report better-than-expected results and guidance, while providing positive commentary about its future results for the next three to four quarters. Further details regarding this issue may be revealed during Nvidia’s conference call with investors.
Impressive Performance
Nvidia’s stock has witnessed a remarkable surge in value, increasing by approximately 213% this year. In contrast, the S&P 500 has gained only 14%.
