NVIDIA Q3 Preview: Will Blackwell Overheating Driving Stock Price Up?
2min read NVIDIA, the last of the Magnificent Seven tech giants, is set to release its Q3 FY2025 earnings (covering July to October 2024), drawing significant market attention. While an earnings beat is widely anticipated, the key question remains: by how much?
Key Focus: Data Center Momentum Backed by Big Tech Spending
NVIDIA's standout growth driver is undoubtedly its data center business. The company benefits from relentless capital expenditures by other tech giants, all of whom recently reported record-high spending. Much of this investment is funneled into NVIDIA GPUs and related equipment. As long as this spending spree continues, NVIDIA's performance is well-supported.
Key Focus: Blackwell Chip Delivery Challenges
Just ahead of the earnings report, NVIDIA's Blackwell chips faced allegations of overheating, sparking fears of delivery delays and a dip in share prices on Monday. A delay could push customers toward the older Hopper series or even competitors' products—a risk CEO Jensen Huang cannot afford.
Blackwell's importance is monumental. A recent Morgan Stanley report projects Blackwell could generate $50–60 billion in revenue in Q1 2025 alone, with 750,000 units expected to sell in the first half of next year. At an estimated price of $30,000–40,000 per unit, Blackwell could deliver $225–300 billion in revenue, underscoring its pivotal role in NVIDIA's roadmap.
Adding to the bullish outlook, Foxconn recently announced plans to build the world's largest GB200 chip production facility dedicated to Blackwell, citing "enormous demand." This signals long-term, sustainable growth rather than a short-term spike.
In the bigger picture, the global data center market, fueled by the AI revolution, is expected to grow from $237.1 billion in 2023 to $453.5 billion by 2033, with a compound annual growth rate of 6.7%. NVIDIA is poised to capture a significant share of this expanding market.
Secondary Focus: Gaming Surprises
NVIDIA's partnership with key supplier AMD has hit turbulence, raising concerns about potential production delays and cost increases if component shortages persist. While NVIDIA has diversified its supplier base, AMD remains a critical player, and its struggles could disrupt NVIDIA's plans.
Another area to watch is NVIDIA's gaming segment, once its flagship business. Though overshadowed by data centers, the global gaming industry continues steady growth. An unexpected upside in this division could provide an additional boost to earnings.
Long-Term Outlook
As the AI era accelerates, NVIDIA's dominance in GPU technology and its position as the backbone of AI infrastructure place it in a league of its own. Despite near-term risks, its strategic alignment with industry megatrends ensures a promising future.
Conclusion
NVIDIA stands at the forefront of the AI revolution, with its data center business and the upcoming Blackwell chip positioning it for significant growth.
While challenges like potential production delays and supplier dependency could create short-term hurdles, the company's ability to capitalize on surging AI demand and sustained tech spending by industry giants underpins its long-term prospects.
With a massive market opportunity ahead and strong fundamentals, NVIDIA remains a pivotal player in shaping the future of AI and computing.
