NVIDIA Earnings Report: Insights and Expectations

Live updates: 

22.02.2024 - Nvidia drives global markets to records highs

Markets are a sea of green on Thursday after Nvidia’s earnings report has boosted global risk appetite and sent stock markets surging. The boost to Nvidia’s share price after another monster earnings report and super forecast has led to a collective relief rally across markets. Nvidia is expected to open higher by more than 14% when US markets open on Thursday, and the Nasdaq is also expected to open up more than 2% higher. The Nikkei and the Eurostoxx 50 index have both hit record highs earlier this morning. Japan’s Nikkei has not reached a record high since 1989, and the index is now above 39,000. When Nvidia was called the most important stock in the world right now, it doesn’t sound like hyperbole.

Nvidia: the Vanguard of the AI revolution  

Nvidia is now on the verge of surpassing Alphabet, the Google parent, in terms of market value. It may be considered one of the Magnificent 7 US tech stocks, but it is easily outpacing gains for the other 6 stocks, with Microsoft expected to open higher by 1.6%, and Meta is currently expected to rise by 2.6% later on Thursday. Nvidia is standing above and beyond its peers in the tech world due to its position as a vanguard of the AI theme. It is the chief producer of hardware that is powering the AI revolution. It has a 98% market share of the GPU market that powers data centres as they generate the AI models of the future. Jensen Huang, the CEO of Nvidia was as bullish as any CEO I have ever heard, when he said that we are reaching a ‘tipping point’ for artificial intelligence, and that demand was coming from all industries across all regions of the world.

Move over Elon

Move over Elon, Jenson Huang is the modern-day Henry Ford or James Watt, and while there are some concerns that competition will eat into Nvidia’s current 98% GPU, it will be hard to dethrone Huang or Nvidia in the current climate.

Global tech stocks

Global tech stocks with a link to AI should do well on the back of Nvidia’s results, as they confirmed the view that demand is growing for anything that powers the AI industry. Thus, it is no surprise that the Eurostoxx 600 and the Nikkei both reached record highs in the hours after Nvidia released results. The information technology sector makes up 26.36% of the Nikkei, and 16.96% of the Eurostoxx index. ASML, the Dutch supplier to global chipmakers, is up more than 4% on Thursday and is powering the European indices to record highs. The FTSE 100 is also higher today, but it is lagging other global indices largely because it does not have a big enough tech sector. The FTSE 100’s tech sector is just over 1% of the index. Today is not the day for energy or financial firms to shine, tech stocks are hogging the limelight, and Nvidia is centre stage.

Germany’s dire manufacturing sector fails to dent the Dax

Elsewhere, the Dax is also on a march higher, even though German manufacturing PMI slumped to its lowest level since October, as declining new orders at home and abroad weighed on the index which fell to 42.3 for February, down from 45.5 in January. Germany is acting like a brake on Eurozone growth right now, and there is a clear divergence between Germany, which is struggling due to its large industrial sector, and France, where both its manufacturing and service sector PMIs beat expectations. The German government has already slashed its growth forecast for this year to 0.2%, which suggests that the economy will only have a limp recovery this year after contracting in 2023. Overall, the Eurozone PMI reports were stronger than expected, defying the German gloom. The better reading for the composite PMI, which rose to 48.9 from 47.9 in January, was driven by the service sector. The service sector PMI for the currency bloc as a whole rose to 50, the first time that it has been in expansionary territory since July, and hopefully stemming a decline that persisted in the second half of 2023.

In the UK, there were also better than expected PMI readings for the service sector, which remained at 54.3 for February, the same rate as January. The composite PMI also rose to 53.3 from 52.9, as the service sector cancelled out the weaker readings for the manufacturing index, which remains in contractionary territory below 50.

The Dax continues to defy Germany’s economic gloom, as it moves in lock step with the overall Eurostoxx index and outpaces gains in the Cac, this is because it is more closely aligned with the global economic outlook than the German economic outlook. Thus, the Dax is doing well due to the strong performance from individual companies like the automakers and Siemens, which also rose to a record high on Thursday.

Chart: European stock market performance, the Dax is outperforming the Cac, even though German growth is weak

Source: XTB and Bloomberg 

Please be aware that information and research based on historical data or performance does not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.

21.02.2024 - Nvidia results beat Wall Street estimates 📈 Shares gains 5% after-market

Nvidia (NVDA.US) results were the most important report for Wall Street for weeks. The Q4 results beat market expectations on both revenues and EPS. Nvidia shares gained nearly 5% after the US market close.

• Revenue (Q4 2023): $22.1 billion vs. $20.41 billion exp.
• Earnings per share (Non-GAAP): $5.16 ($4,93 GAAP) vs. $4.63 exp.
• Data center revenue: $18.48 billion vs. $17.21 billion exp.
• Gaming revenue: $2.98 billion vs. $2.72 billion exp.
• Automotive revenue: $281 million vs $272.1 million exp.
• Professional Visualization revenue $463M vs $435.5 million exp.
• Gross margin: 76.7% vs. 75.4% forecasts (66,1% in Q4 2022)
• Company estimates Q1 revenue at $24.8 billion (with 2% deviation tolerance) vs $21.9 billion Wall Street forecasts.

Facts from report 

• Data Center revenue for the fourth quarter was a record, up 409% YoY (27% sequentially)
• Gaming revenue was up 56% YoY signalling a major improvement (flat sequentially)
• Automotive revenue was down 4% from a year ago and (8% sequentially)
• Professional Visualisation revenue was up 105% YoY (11% sequentially
• Free cash flow: $11.22 billion vs $10.82 billion ($1.74 billion in Q4 2022)
• Operating expenses: $2.21 billion vs $2.23 billion (25% y/y)
• R&D expenses:$2.47 billion, vs $$2.43 billion exp.

Outlook for the Q1 2024

• Gross margins are expected to be 76.3% and 77.0%, respectively, plus or minus 50 basis points.
• Expenses are expected to be approximately $3.5 billion
• Other income and expense are expected to be an income of approximately $250 million, excluding gains and losses from non-affiliated investments.
• Tax rates are expected to be 17.0%, plus or minus 1%, excluding any discrete items.
• The report came in very strong, signalling huge AI investment momentum and demand for AI chips (data centers). Investors' attention now shifts to the conference call. The most important thing now will be what kind of communication the company will adopt for the next quarters of the year, when a large part of the 'low base' effect will evaporate. It's also worth noting that the company has a huge market cap (more than $1.6 trillion), and it's hard to expect  shares to grow 100% in each subsequent year.

Source - xStation5

Please be aware that information and research based on historical data or performance does not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.

Nokia partnership with Nvidia

Finnish telecommunications company and smartphone maker Nokia (NOKIA.FI) has announced that it is collaborating with Nvidia (NVDA.US) on mobile networks. Nokia says the collaboration will enable the construction of AI applications and help bring artificial intelligence services to the telecommunications sector. According to the company's announcement, the collaboration will explore how artificial intelligence can play a transformative role in the future of the telecommunications industry. Nokia shares reacted to the news with a surge, but it was quickly erased and the stock is once again trading flat.

Source - xStation5

Please be aware that information and research based on historical data or performance does not guarantee future performance or results. Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk.

Waiting for Nvidia 

The big news will be Nvidia results due after the US market closes tonight. The hype around these results is as big as before a Fed meeting and Nvidia’s earnings report may have a bigger impact on the overall stock market than the Fed! This is because Nvidia is the best performing stock on the S&P 500 this year, 5 stocks have fueled 75% of the S&P 500’s year to date gain. Added to that, Nvidia stock price’s gain this year is more than the next two best performers – Meta and Microsoft – combined. Nvidia is considered the vanguard of the AI theme and as its chips have a 98% share of the GPU industry. However, Nvidia shares fell sharply on Tuesday and were down 4.35%, they are also scheduled to fall another 1.5% on Wednesday. Since Nvidia is so important for the direction of overall stock markets, the outcome of this evening’s report could be decisive in where stocks go next. We already expect a monster report, so the focus for this earnings release is what Nvidia forecasts for the future. Will it see more competition, and could this eat away at revenues in the future? If yes, then we could see a lot of volatility for markets in the coming days. But, if Nvidia signals that the future is rosy, then we could expect another leg higher in the recent rally.

20.02.2024 - Nvidia is expected to be the best performer in the S&P 500 through 2025, by this measure

Nvidia, will release their results on Wednesday night, and expectations are for another monster report. Unsurprisingly, there are big expectations for Nvidia, and if they fail to deliver this could be a major upset to the S&P 500, as the top five stocks in the US blue chip index have fueled 75% of its gains so far in 2024.

So far, the major AI stocks in the index have reported decent earnings, but Nvidia is the one everyone is watching, because it creates the hardware that’s powering the AI revolution. Nvidia has a 98% market share of the data centre GPUs that are powering AI all over the world. This is great for profits now, but what about the future? 

Competition for generative AI hardware is heating up and it is not likely that Nvidia’s 98% market share will last. Also, Nvidia’s client base is small, a mere 5 companies generate 46% of revenues, according to Barclays credit analysts. They include Amazon and Meta who are working on their own chips. But this week, the focus will be on whether Nvidia can deliver another stellar quarter of growth. In Q3 it set the market alight when it tripled revenues. This quarter, earnings per share and revenue growth are expected to be 400% and 200% respectively, that’s according to Bloomberg. 

Whether or not Nvidia can rally another 47% will depend on if they meet expectations for Q4 earnings season and also what they say about the future. They could also try to sweeten investors with dividends and stock buybacks. Either way, the Nvidia results could have a big impact on stock markets this week. 

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19.02.2024 - The long-term risks for Nvidia

When market breadth is so concentrated, the market is right to worry about earnings season. So far, the major AI stocks in the index have reported decent earnings, but Nvidia is the one everyone is watching, as it is creating the hardware that is powering the AI revolution. Nvidia has a 98% market share of the data centre GPUs that are powering the AI all over the world. This is great for profits now, but what about the future? Competition for generative AI hardware is heating up and it is unlikely that Nvidia’s 98% market share will last. Also, Nvidia’s client base is small, a mere 5 companies generate 46% of revenues, according to Barclays credit analysts. They include Amazon and Meta who are working on their own chips. The risks around Nvidia are the news stories of the future. This week, the focus will be on whether Nvidia can deliver another stellar quarter of growth. In Q3 it set the market alight when it tripled revenues YoY. 

Another mega quarter is expected, with EPS and revenue growth expected to be 400% and 200% respectively, according to Bloomberg. Whether or not Nvidia can rally another 47% this year could depend on if it can 1, meet expectations for Q4 earnings season and 2, what it says about the future. The market has rewarded companies that have exceeded earnings expectations, and it has punished companies that have not done so. If Nvidia points to the growing competition, then it may need to give shareholders a sweetener, for example a share buyback announcement or even a dividend, to stem a share price slide.

Introduction to the company

NVIDIA Corporation (NVDA) is an American semiconductor company and a leading global manufacturer of high-end graphics processing units (GPUs). Headquartered in Santa Clara, California, NVIDIA will hold approximately 80% of the global GPU semiconductor chip market share as of 2023.

NVIDIA has gained notoriety for its innovative GPU technology, which revolutionised the gaming industry by delivering extraordinary graphics performance. However, its influence extends far beyond the world of gaming. NVIDIA GPUs (Graphics Processing Units) have become well known in various sectors, such as the automotive industry, healthcare and artificial intelligence-related applications, such as Chat - GPT. OpenAI CHAT- GPT developed its technology using a supercomputer powered by 10,000 NVIDIA GPUs. NVIDIA is the world's most profitable semiconductor chip brand thanks to rising demand for AI GPUs, with Meta and Microsoft as major customers.

The company is recognised for its constant search for innovations, with particular attention to the development of technologies for machine learning (Machine Learning) and Artificial Intelligence. With initiatives like the CUDA parallel computing platform, their information platform and programming model, and Tensor Core technology, NVIDIA is positioning itself at the centre of the accelerated computing revolution. Accelerated computing, or accelerated processing, refers to the use of specialised hardware, such as graphics processing units (GPUs), to perform certain operations significantly faster than traditional central processing units (CPUs).

Another interesting offering from NVIDIA includes GeForce Now, a service from Nvidia, which allows computers of various powers and devices to play high-quality titles via cloud gaming. 

Launched in January 2017, the service requires an internet connection and has continued to improve over time. Using an advanced adaptive system, GeForce Now automatically adjusts performance based on available bandwidth. With over 25 million subscribers in over 100 countries and a growing data centre network, the service is rapidly gaining popularity around the world.

NVIDIA's success is also reflected in its broad presence in data centres around the world, where its GPUs power advanced artificial intelligence, machine learning and high-performance computing applications.

In this dynamic environment, NVIDIA continues to be a leader in the semiconductor and graphics processing industry, advancing a vision of innovation and technological leadership. Additionally, NVIDIA Corporation is listed on the NASDAQ stock exchange. Investors can find and trade NVIDIA stock under the ticker symbol NVDA on the NASDAQ.

History 

1993: The Foundation

On April 5, 1993, Jensen Huang, Chris Malachowsky and Curtis Priem founded NVIDIA with the bold goal of introducing 3D graphics to the gaming and multimedia markets.

1999: The Introduction of the GPU

In 1999, NVIDIA revolutionised the computing industry by inventing the GPU, a graphics processing unit destined to redefine industry standards.

2006: Opening of CUDA

In 2006, the company opened the doors of GPU parallel processing capabilities to science and research by launching the 'CUDA' parallel computing platform.

2012: Energising Evolution - The Central Role in the Development of Artificial Intelligence

In 2012, NVIDIA ushered in the era of modern artificial intelligence by powering the revolutionary AlexNet neural network. This moment marks the beginning of a new phase, with AlexNet, a convolutional neural network (CNN) that excels in image recognition and classification.

2018: RTX

In 2018, NVIDIA reinvented computer graphics with RTX™, the first GPU capable of real-time ray tracing, taking visual quality to new levels.

2022: NVIDIA Omniverse platform

In 2022, NVIDIA is at the centre of building the metaverse, the next phase of the Internet, with the NVIDIA Omniverse™ platform, helping shape the future of digital interactions and virtual collaboration.

NVIDIA Sustainable Computing: A sustainable promise

With NVIDIA, the approach to data centre energy challenges is transformed. Currently, these centres represent only a modest 1-2% of global electricity production, but the growing trend of expansion raises serious questions about sustainability. The transition from CPU-based workloads to powerful GPU-accelerated systems worldwide promises energy savings of as much as 12 trillion watt-hours per year. This savings is comparable to the electricity consumption of approximately 1.7 million homes in the United States. The driving force of this energy revolution emerges distinctively with NVIDIA, channelling efficiency and sustainability towards a vision of net-zero emissions.

Final Thoughts

NVIDIA continues to be a leader in the industry, highlighting a vision of innovation and technological leadership. The expected earnings report and growth outlook point to an exceptional fiscal period, maintaining the attention of investors and the tech community.