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NVIDIA's Earnings: A Crucial Test for the AI Bubble Amid Chip Challenges

Word on the StreetWednesday, Nov 20, 2024 2:00 am ET
1min read

As the earnings announcement from NVIDIA, the world’s most valuable company, approaches, the market is on edge. This announcement is pivotal, as it may determine whether the current AI bubble continues to inflate or starts to deflate. NVIDIA, recognized for its AI chips, has seen an extraordinary surge in stock price, tripling this year alone, backed by widespread enthusiasm for artificial intelligence.

Investors are eagerly anticipating NVIDIA’s quarterly results, expecting revenues to soar thanks to the surging demand from tech giants like Meta, Microsoft, and Google for AI infrastructure. There is optimism that NVIDIA’s performance will exceed expectations, reinforcing the enthusiasm around artificial intelligence and sparking a continued rally in global stock markets. Analysts predict a revenue increase of 84% to $33.28 billion, a remarkable leap considering previous quarters.

However, this optimism is not without caution. Recent reports have suggested that NVIDIA’s latest AI chip, the Blackwell, is facing overheating issues in high-density server racks. These technical challenges have delayed deliveries and caused apprehension among major clients like Google and Microsoft. Although NVIDIA has assured that design tweaks are underway to tackle these problems, such delays could impact upcoming earning forecasts significantly.

The situation illustrates a broader concern: the AI industry’s supply chain vulnerabilities. NVIDIA’s reliance on key partners, like Super Micro Computer, which is facing financial difficulties, may pose risks to its chip supply chain. As potential shift in orders to other suppliers such as Gigabyte and Asus might help, the scalability and technical capacity of these suppliers compared to longstanding partners could result in increased costs or even impede NVIDIA’s market competitiveness.

The stakes for NVIDIA’s upcoming quarterly report are incredibly high. While the company’s data center segment is still expected to deliver strong growth, with projected revenues of $29 billion, the issues with the Blackwell chip could hinder potential exponential growth. Wall Street analysts remain focused on whether NVIDIA can maintain its growth trajectory or face setbacks due to technical and supply chain challenges.

Despite these hurdles, expectations for NVIDIA remain optimistic, fueled by a belief in its technological leadership and market position. The market waits to see if the company can deliver a performance that exceeds the already high expectations, knowing that anything less might be perceived negatively, given NVIDIA's currently elevated stock prices. As anticipation builds, the company’s next earnings report is seen as a watershed moment for the AI investment landscape.

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West-Bodybuilder-867
11/20
$MSFT seems to be stuck in neutral for the past year. With Ignite and Bitcoin news, is there a possibility of a modest price increase?
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Michael Roberts
11/20
$META NVDA will release its Q3-25 earnings and Q4-25 (Blackwell) Guidance on January 2025 by 4:01 PM ET today, November 20, 2024. A key point to note is that NVDA's fiscal year runs from February to January, and they report on the Aug-Oct quarter, which is Q3-25. Additionally, NVDA provides strategic management guidance for the next 90 days, covering Q4-25 (Nov 2024-Jan 2025). This guidance will focus on the Blackwell chip, and orders for the Blackwell Chip have already been secured for the next 12 months.
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Aime
11/20
Data centers still strong, bullish on $NVDA long term.
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Straight_Turnip7056
11/20
Chips in high-density racks, NVIDIA’s next hurdle.
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acg7
11/20
Blackwell overheating, design tweak needed, not panic time.
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Argothaught
11/20
NVIDIA is the king of AI chips, but the Blackwell drama is wild. Overheating? Delays? Clients breathing down their necks. It’s like watching a soap opera. Wonder if they'll patch it up or if we'll see a dip. 🤔
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Curious_Chef5826
11/20
NVIDIA's AI chip issues might be a short-term blip
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GJohannes37
11/20
Blackwell's overheating is a bit of a buzzkill. Design tweaks could be a game-changer
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