Nvidia’s AI lead ups stakes for earnings

It's been a wild few days for the tech community after the firing of OpenAI CEO Sam Altman, and then his hiring by Microsoft, and ongoing unrest amid the engineers piloting artificial intelligence (AI) technology.

Nvidia's earnings, due Tuesday after the closing bell, will be another chapter for the AI world as the company provides a fresh update on the progress it has been making with its AI push, which has lifted the shares up more than 245% this year.

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To date, Nvidia has a list of noted U.S. customers, including Microsoft, Amazon, Google, Meta and OpenAI, to name a few.

FOX Business previews Nvidia's highly anticipated report.

1. What is Nvidia's next AI move?

Alongside the financial data in Tuesday’s report, Nvidia shareholders will be on the lookout for the company’s next move in the AI sector.

Nvidia launched its latest ethernet networking AI platform on Monday, saying it will soon be available through its customers’ Dell Technologies, Hewlett Packard Enterprise and Lenovo.

"Nvidia's chips power the fast-growing AI economy," Parkway Venture Capital’s General Managing Partner Gregg Hill told FOX Business. "Everyone seems to be looking for assurance that the growth in their sales is continuing while investors are looking for signals as to demand over the next year."

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"We see AI enabling transformational change across almost all enterprises in the coming years, and Nvidia's work will be critical to enable those transformations," Hill added.

Over the second quarter, major cloud service providers announced massive Nvidia H100 AI infrastructures as leading enterprise IT system and software providers announced partnerships to bring the company’s AI to every industry, Nvidia CEO Jensen Huang said in the Aug. 23 earnings report.

"The more organizations that look to adopt smartbots and chatbots, the more Nvidia [finds] themselves at the center of the burst of interest in this sector," Tradier’s CEO Dan Raju said. "New players continue to seek to ride this wave by announcing newer AI chips, but it will be interesting to see how they catch up in comparison."

2. Will results match expectations?

"We expect much stronger results and guidance," Susquehanna Financial Group analysts said in their latest research note on the company.

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Group analysts pointed to improved supply and Nvidia's deep backlog for the lofty predictions. The company is currently valued at roughly $1.2 trillion.

Meanwhile, Wall Street expects fiscal profits for the third quarter to shoot up 481% to $3.37 per share, with revenue jumping 173% to $16.19 billion, as tracked by Refinitiv.

In its last quarter, the Santa Clara, California-based, company announced a $25 billion stock buyback as earnings beat expectations after reporting $13.5 billion in record revenue.

3. Will China restrictions cloud outlook?

With mounting U.S. restrictions placed on technologies that are moving in and out of China, Wall Street will also have an eye on what Nvidia says about the country as it forecasts revenue and sales over the next period.

"Nvidia likely has so much demand for their chips that having to reduce or eliminate sales to China won’t impact them," Hill said. "It’s likely that Chinese manufacturers will eventually supply the majority of semiconductors for that market, and it won’t impact adoption of AI technologies. On a larger scale, tensions between the U.S. and China over Taiwan have a much higher risk of impacting supply chains and disrupting adoption."

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Susquehanna analysts predict slowed growth in the coming quarters due to a modest pull-in of orders around the Chinese restrictions.

4. Nvidia's stock performance - What's ahead?

Nvidia shares closed at a fresh record Monday ahead of results. The majority of Wall Street analysts are bullish on the stock, with 18 rating it a "strong buy" and 33 a "buy" while two rate it as a "hold" and none have a "sell" rating.

"The bulls of the stock have expressed that the pickup in global demand with AI chips, particularly in India, can more than make up for any China order shortfalls, as well as the sentiment that the Nvidia AI chip is superior relative to peers and might prevent more defections," Ed Egilinsky, managing director at Direxion, told FOX Business.

5. What about gaming?

With most of the investors’ focus on Nvidia's leading AI technologies and chips, the company said its GeForce GPUs promise gamers the most frames per second (FPS) of all competitive games.

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Gaming prices continue to stabilize for Nvidia, Susquehanna analysts said, while also reporting an increase in gaming market share despite a dip in quarterly sales on Nintendo Switch.

The chipmaker is scheduled to release the quarterly report after the close of trading on Tuesday.

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