Amidst market turbulence, Nvidia (NVDA) stock investors experienced a turbulent period before the release of its Q2 earnings in August. The share price dipped below $100 on August 5, rose again, and surged for six straight days from the 12th to the 19th, reaching around $128 on August 21. This fluctuation was due in part to global market upheaval following the yen-carry trade and potential chip delivery disruptions caused by a Blackwell architecture design flaw.
Despite these challenges, Nvidia retains its position as the top player in the AI industry, holding an impressive 80% market share in AI processors. However, competitors like AMD are stepping up their game. AMD’s $5 billion acquisition of ZT Systems on August 19 to boost GPU sales made a significant impact, causing Nvidia stock to drop 2% the following trading day. GPUs play a crucial role in AI processing by handling the matrix calculations involved.
Looking ahead, Nvidia’s fiscal Q2 earnings on August 28 will serve as a litmus test for the AI and semiconductor industries. Insights from earnings reports of other chip manufacturers can provide valuable guidance on earnings projections and future stock movements.
- AMD exceeded expectations with robust Q2 earnings on July 30, reporting a 9% revenue increase to $5.84 billion and an earnings rise of 19% to 69 cents per share. Intel, on the other hand, faltered due to an earnings miss, citing accelerated production of Core Ultra PC chips capable of AI workloads as the reason for its net loss.
Following a record Q1 revenue of $26.0 billion, a substantial 18% growth from Q4 and an impressive 262% surge from a year ago, Nvidia projects Q2 FY25 revenue to hit $28 billion, with gross margins anticipated at 74.8% and 75.5% for GAAP and non-GAAP, respectively.
CEO Jensen Huang emphasized Nvidia’s pivotal role in revolutionizing data centers into AI factories in response to the ongoing industrial shift. Analysts predict bright prospects for Nvidia stock, with HSBC raising the price target to $145 from $135. The expected continued momentum driven by AI GPU demand is seen as a positive indicator for ongoing strength. The AI hyperscaler capex trend and increasing AI demand position Nvidia for sustained growth.
While a product roadmap delay may pose some immediate challenges, strong consumer demand and a favorable competitive position bode well for Nvidia’s performance. Analysts are optimistic about Nvidia’s earnings power in 2025.
In conclusion, Nvidia’s upcoming earnings report will not only signal the company’s financial health but also reflect broader trends in the AI and semiconductor sectors. Eyes are on Nvidia to navigate the evolving landscape and maintain its competitive edge.
