After trading on Tuesday (early Wednesday Beijing time), semiconductor giant Nvidia will release its third quarter (three months to the end of October) quarterly report. As one of the biggest beneficiaries of this year's artificial intelligence (AI) wave, the market has high expectations and confidence in its performance. That's why the company's stock price hit a historic high on Monday.
So far this year, Nvidia's stock price has surged by over 250%, with a market value of $1.25 trillion, making it a well-deserved "star stock" this year. In terms of the global semiconductor industry, NVIDIA's market value is higher than the sum of the five semiconductor companies AMD, Intel, Qualcomm, Broadcom, and ASML, making it the undisputed king in this field.
Analysts expect the stock to be the biggest driving force behind the overall profit growth of the S&P 500 index in the third quarter.
Currently, Wall Street generally expects Nvidia to achieve a blowout like quarterly performance growth rate for the third consecutive time. Specifically, the company's revenue for the third quarter is expected to reach $16.092 billion, a year-on-year increase of 171%; Earnings per share was $3.36, compared to $0.58 in the third quarter of last year.
It is worth noting that the market expects data center revenue to reach $12.82 billion in the third quarter, reaching a historic high of 233.57% year-on-year, continuing to drive the company's total revenue growth. In addition, the net profit margin is expected to increase from 24.55% last year to 51.64%; The operating cash flow is also expected to reach a record high of 7.42 billion US dollars.
In the upcoming financial report, the sales of artificial intelligence chips will undoubtedly receive the closest attention. According to Jon Peddie Research, NVIDIA's GPU shipments will account for 87% of the entire market this quarter, followed by AMD and Intel, with market share of 10% and 3%, respectively.
Wall Street is mostly bullish
Vivek Arya, a research analyst at Bank of America, wrote in a report: "We expect Nvidia to release better than expected data and improve guidance in its report on November 21st
Bank of America remains bullish on the stock, calling its valuation "convincing" and pointing out that seasonal trends remain favorable.
In short, we expect Nvidia to have another strong quarter, but we believe investors have already anticipated this, "said Susquehanna Financial Group analyst in a research report. He refers to the high threshold for Nvidia to perform better than expected.
John Butters, senior analyst at FactSet, stated in a report that "Nvidia is expected to become the largest contributor to the overall third quarter earnings growth of the S&P 500 index
He pointed out that if this company is excluded, the comprehensive profit decline of the S&P 500 index in the third quarter will expand from 0.4% to 1.8%.
Julian Emanuel, Senior Managing Director of Evercore ISI, stated on Sunday that "it is still NVIDIA's world", but he warned investors to be prepared for "post NVIDIA volatility" no matter which direction the stock market moves in.
According to data, out of 52 analysts studying Nvidia, 49 rated the stock as "buy" and the other three rated it as "hold". The average target price given by analysts is $655.60, which is approximately 33% higher than Nvidia's current stock price.
Looking towards 2025?
Wall Street's gaze may have shifted to a more distant future. Analysts say investors hope that Nvidia's high growth rate can continue for many years, so they hope to see more definite signs to prove this. Wall Street currently expects Nvidia's quarterly revenue to reach $22 billion by the autumn of 2025.
Citigroup analysts pointed out that the market will focus on the impact of geopolitical factors on Nvidia's data center sales outlook for the fiscal years 2025 and 2026, the sustainability of data center sales and early data on general AI applications/products, as well as Nvidia's new AI hardware roadmap.
However, voices of concern are also constantly emerging.
UBS analyst Timothy Arcuri stated that the "key argument about NVIDIA stocks" is the direction for 2025, as investors seem to be concerned that customers will consume their large purchasing intentions, thereby reducing interest in purchasing new products. Although there is "unlikely" to be too much substantive discussion about 2025 during this performance release period.
Goldman Sachs analyst Toshiya Hari pointed out that Wall Street seems to be concerned that Nvidia Data Center's revenue may decline in 2025, as longer delivery times are driving customers to place orders in excess of actual demand.
He wrote that currently, it is extremely challenging to evaluate the performance of NVIDIA's data center business in 2025, and the financial report conference call is unlikely to resolve the debate between long and short positions.
Jerry Chen, a senior analyst at Jiasheng Group, said that due to high market expectations, if the performance falls short of expectations, it may increase the risk of short-term stock price correction. However, the impact of quarterly financial reports is difficult to shake the company's optimistic outlook in the medium to long term.