Despite increasing competition, NVIDIA As graphics processing units (GPUs) in the technology industry, artificial intelligence chips account for 80% of the rapidly growing market and are the first choice for producing and deploying generative artificial intelligence software.
When Nvidia reports third-quarter earnings on Wednesday, investors will be hoping to see whether the company can continue its rapid growth even as the artificial intelligence craze enters its third year.
HSBC analyst Frank Lee wrote in a note this week that Nvidia is entering “uncharted territory” as it attempts to continue growing on its $3.5 trillion market cap.
“We have carefully considered this impressive growth trajectory and not only do we see no signs of slowing down, but we expect data center momentum to increase further in 2026,” Lee said in the note, which has a buy rating on the stock.
Future growth must come from Blackwell, whose next-generation chips are just starting to ship to end users, such as Microsoft, Google and OpenAI. More important than Nvidia’s third-quarter results is the company’s view on demand for Blackwell chips.
Nvidia Chief Executive Jensen Huang is likely to brief investors on Wednesday, and he may also respond to reports that some systems based on Blackwell chips are experiencing problems. overheating problem.
In August, Nvidia said it expected Blackwell’s January quarter sales to be in the “billions of dollars.”
“Our base case is for NVDA to ship ~100,000 Blackwell GPUs in Q4, which we believe is near the low end of investor expectations,” Raymond James analyst Srini Pajjuri wrote in a note last week. A strong buy rating on the stock.
The stock is up nearly 19% since Nvidia’s last earnings report, capping a stunning run that has seen shares rise eightfold since the release of ChatGPT in late 2022. has grown significantly, and its forward price-to-earnings ratio has risen to just below 50, according to FactSet.
Growth is slowing, but that’s partly because Nvidia’s revenue is much larger than it used to be. Nvidia reported sales growth of 122% in its latest quarter. This was down from year-over-year growth of 262% in the April quarter and 265% in the January quarter.
Analysts surveyed by the London Stock Exchange Group (LSEG) expected revenue of approximately US$33.12 billion, an increase of nearly 83% from the same period last year. The company is expected to earn 75 cents per share, according to the LSEG consensus forecast.
Nvidia’s data center business accounted for nearly 88% of sales in the latest quarter, taking the company’s traditional computer gaming business out of the spotlight.
For example, the company produces chips for the Nintendo Switch, a Japanese video game company that said sales of the Nintendo Switch have dropped significantly as the console ages. Nvidia’s gaming business is expected to grow about 6% to $3.03 billion, according to FactSet estimates. Although analysts expect its sales to grow 38% to about $360 million, its automotive business, which makes chips for electric vehicles, remains small.
But none of that matters as long as Nvidia’s data center business continues to nearly double every year and Huang signals to investors that the party isn’t over.
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