Anticipated Features and Reveals by Nvidia on Nov. 20.
One of the highly anticipated events this month, especially in tech and finance circles, is happening on November 20. AI powerhouse Nvidia (NVDA dropping 2.62%) is set to release its latest earnings figures and provide updates on its potential future growth catalysts. If investors are pleased with these figures, this already skyrocketing stock, on track for a 186% gain this year up to early last week, could see further growth.
The tech titan has been impressing the investment community lately. It's beaten earnings estimates for the past four quarters, earnings have soared by triple digits, and it's attained gross margin levels exceeding 70%. Despite this, Nvidia managed to secure a spot in the Dow Jones Industrial Average, and even briefly became the world's most valuable company earlier this month as its market cap surpassed that of Apple.
Given Nvidia's strong performance, investors are eager for updates from this market leader. However, we aren't completely in the dark. Nvidia and others have provided some clues. Here's what to expect from the AI giant on November 20.
The Preferred GPUs
First, a brief overview of Nvidia's recent journey. It manufactures the world's most sought-after graphics processing units (GPUs), chips essential for AI tasks like training and inferencing models. Nvidia's GPUs are renowned for their speed, and tech giants involved in AI projects, like Microsoft and Meta Platforms, are among its significant clients.
This has led to significant earnings growth for Nvidia in recent years. For instance, in the latest quarter, Nvidia reported $30 billion in revenue, a record, and a higher revenue level than it managed in an entire year just a couple of years ago. The AI boom has undoubtedly contributed to this increase in Nvidia's earnings and share price, which has surged by 2,600% in the past five years.
Now, let's move on to what Nvidia might mention during its earnings report this week. During its previous report, Nvidia forecast third-quarter fiscal 2025 revenue of $32.5 billion, representing double-digit growth from the same period last year. Although this is a decrease from recent triple-digit gains, I don't view it as a slowdown. Taking into account the rapid growth rate over the past few years, Nvidia's comparison quarters aren't becoming significantly more challenging. The company generated more than $18 billion in revenue during the third quarter last year, an extremely high level.
Nvidia's Gross Margins
Nvidia also predicted that gross margins, both on a GAAP and non-GAAP basis (generally accepted accounting principles), would be 74.4% and 75%, respectively, in the third quarter of this fiscal year. Furthermore, Nvidia forecast a gross margin in the mid-70% range for the full year. This indicates that Nvidia is highly profitable on its sales, and the graph shows it's managed to maintain these levels over the past year.
In its previous earnings report, Nvidia also offered reasons to be optimistic about the third quarter and beyond. The company mentioned that demand for its Blackwell architecture, which it expects to launch in the fourth quarter, has exceeded supply. This is a clear sign that customers are heavily interested in this new platform.
Earnings reports from other tech giants support this idea.
"We enjoy an excellent partnership with Nvidia," Alphabet chief Sundar Pichai stated during its recent earnings call. "We're excited about the GB200s, and we'll be one of the first to provide it at scale."
Meta, a heavy user of Nvidia GPUs, also spoke of increasing its investment in AI infrastructure after already making it the company's primary investment area this year, during its earnings call. Lastly, Taiwan Semiconductor Manufacturing, which manufactures Nvidia's GPUs, reported double-digit revenue growth in the third quarter and spoke of high demand from customers.
"Overwhelming" Demand
"The demand is genuine, and I believe it's just the beginning of this demand," Taiwan Semiconductor CEO C.C. Wei stated during the earnings call. He also mentioned a comment made earlier by Nvidia CEO Jensen Huang, who described demand for the new Blackwell chip as "Overwhelming."
These hints from other companies in the industry suggest Nvidia will talk about the continued strong demand for Blackwell and potentially its current architecture – Hopper – as well. Nvidia's earlier systems continue to sell because all Nvidia products work together seamlessly, and companies eager to advance their AI capabilities purchase what's available at the moment.
Since Nvidia started its fourth quarter, the period when Blackwell is set to launch, it may provide specific details about how this is unfolding and share expectations for Blackwell's revenue.
Could there be any potential issues in the report? It will be crucial to listen for any comments on whether troubles facing Super Micro Computer, an equipment manufacturer and Nvidia client, may impact Blackwell system sales or distribution in the coming months. Separately, while high demand is excellent, Nvidia must address the need to eventually serve all customers. Any information on this will be welcome.
In conclusion, there are many reasons to be optimistic about Nvidia's upcoming report, considering its earnings track record, comments from other AI industry heavyweights, and the potential of Blackwell. We might be looking at another significant moment for the stock and investors.
Investors are closely watching Nvidia's earnings report on November 20, as the company's strong performance and potential future growth catalysts could lead to further gains in its already skyrocketing stock. Given Nvidia's dominance in the market for graphics processing units (GPUs),which are essential for AI tasks and widely used by tech giants like Microsoft and Meta Platforms, any updates on demand for its new Blackwell architecture could significantly impact its revenue.
In light of the strong earnings growth Nvidia has experienced in recent years and its impressive gross margin levels, investors will be interested in hearing any predictions for future earnings and gross margins from the company during its earnings report. Additionally, any comments on potential issues facing key clients or the need to address high demand and serve all customers will be closely watched by investors.
