NVIDIA's results may provide a significant test for the stock market in general, and AI-adjacent stocks in particular. NVIDIA is the chip designer at the vanguard of AI, and the AI infrastructure build-out which is contributing so much to US economic growth. It is also a key signifier for other semiconductor players such as Micron Technology, Arm, Advanced Micro Devices and Marvell Technologies (which reports tomorrow).
So, what should investors focus on when results are released? Analysts expect second-quarter revenue to come in between $92-96 billion which would represent around a 67% increase from a year ago. Earnings per share (non-GAAP) is forecast between $2.10-2.18. But data centre revenue is the biggest component by far, and this needs to accelerate to please the bulls.
Margins also need to keep growing, although at 75% last quarter that won't be easy. But ultimately, forward guidance will be key, as NVIDIA has delivered an upside surprise for seven consecutive quarters now. Investors would certainly reward the chip designer on any signal that demand is broadening out beyond the usual hyperscaler names. So, no pressure.
Source: TN Trader
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