NVIDIA Reports Q1 2023 Earnings: Revenue Down 5%, Services Business Sets New Record

The dollar has recovered despite concerns over the Fed's independence, while European stocks have calmed down after a French selloff. NVIDIA Corporation is the world leader in programmable graphics processors, developing software and products for computing, networking, graphics, and automotive industries. Net sales are distributed geographically between the US, Taiwan, China, and other regions.

Nvidia Corporation is set to release its Q2 earnings after the market closes on Wednesday, August 27. Analysts expect a 54.6% year-over-year (YoY) revenue growth, reaching $46.45 billion, and adjusted earnings per share (EPS) of $1.01. The company has a history of exceeding estimates, with an average revenue beat of 7.3% over the last two years [1].

Despite strong performance, enthusiasm for AI stocks has cooled, with the Information Technology sector being the worst performer in the S&P 500 this month. However, Nvidia's earnings could set the tone for the market's sentiment on the AI boom [1].

Analysts remain bullish on Nvidia's prospects. Twelve out of 13 Wall Street analysts call the stock a "buy," with price targets ranging from $155 to $225 [1]. Stifel's top analyst, Roy, expects Nvidia to deliver another strong quarter, with Q2 revenue expected to reach $45.8 billion, slightly above Nvidia's own outlook. He believes demand remains robust and supply issues are limited, supporting healthy sequential growth into Q3 [4].

However, Nvidia faces potential headwinds from China export curbs, which could result in an $8 billion hit. The company has reportedly told suppliers to suspend production of its H20 chip due to security concerns raised by Beijing [3]. This move is expected to impact the company's revenue, particularly in its data center business, which has been a primary growth engine.

Nvidia's earnings report will also address concerns about its ability to operate in China. The company has faced uncertainty due to reported security concerns over its chips, leading to temporary halts in production and sales. Despite these challenges, the company's earnings will not be significantly impacted by its China operations, as the revenue from this region is not expected to materialize in the current fiscal quarter [2].

Investors are hopeful that Nvidia's earnings will confirm the company's continued leadership in AI infrastructure and allay fears about an AI bubble. The company's strong product cycle, ecosystem lock-in, and demand inelasticity for AI compute make it a compelling investment thesis.

In conclusion, Nvidia's earnings report on Wednesday will be a critical test of the stock market's AI euphoria. The company's strong position in AI infrastructure and partnerships with major hyperscalers make it a key player in the AI revolution. While short-term risks exist, Nvidia's long-term trajectory is promising, making it a must-watch for investors betting on the future of AI.

References:
[1] https://www.ainvest.com/news/nvidia-q2-earnings-expect-stock-price-forecast-2508/
[2] https://www.ainvest.com/news/nvidia-set-report-q2-earnings-8-billion-china-hit-2508/
[3] https://www.nasdaq.com/articles/nvidias-earnings-aug-27-what-history-tells-us-about-nvidia-stocks-post-earnings-release
[4] https://www.investopedia.com/what-wall-street-analysts-think-of-nvidia-stock-ahead-of-earnings-wednesday-11796072