What to expect from Nvidia earnings as company's AI influence grows

Nvidia offices (file photo)
Nvidia offices (file photo) Copyright AP Photo
By Angela Barnes
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Nvidia is already popular among investors with its market capitalisation rising to $1.83 trillion last week, surpassing Alphabet’s $1.82 trillion market cap - and now the AI darling of the markets has helped boost the stock of other AI companies by revealing its stake in them.

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The chipmaker said in an SEC filing last week that it held investments in Arm Holdings, SoundHound AI, and biotech company Recursion Pharmaceuticals, as of 31 December 2023.

Following the update, the share prices of the companies climbed, reflecting investor sentiment around anything AI related and linked to Nvidia.

At the end of trading last Thursday, Arm's share price was up 5.76% while SoundHound AI rose 66% - and Recursion Pharmaceuticals climbed 13.83%.

So far, however, Nvidia has been the biggest beneficiary of the interest in AI with its share price up around 49% this year after a 239% rise in 2023.

What to expect from Nvidia's next earnings results?

The update from Nvidia comes as the company prepares to share its latest financials with investors.

Analysts are expecting Nvidia to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended January 2024 next week.

The maker of graphics chips for gaming and artificial intelligence is seen as posting quarterly earnings of $4.51 per share in its upcoming report, representing a year-over-year change of +412.5%.

Meanwhile, revenues are set to be $20.18 billion, up 233.5% from the year-ago quarter, according to Zacks Consensus Estimate.

Record fiscal third-quarter 2023 revenue

In November, Nvidia posted record fiscal third-quarter 2023 revenue as demand for its AI-powered chips has soared.

It came in at $18.12 billion (€16.62 billion), higher than analyst estimates of $16.18 billion and amounting to a 206% year-on-year increase, as well as an increase of around 34% more than the previous quarter.

The strong financial results were supported by exceedingly strong demand for the company’s graphic processing units (GPUs), which are essentially computer chips that render graphics and images by performing rapid mathematical calculations.

The company also announced adjusted earnings per share of $4.02, higher than the $3.37 per share expected. Net income clocked in at $9.24 billion, a massive leap from the $680 million seen in the last fiscal year’s third quarter.

Data centre revenues soared to $14.51 billion, ahead of estimates of $12.97 billion, mainly boosted by cloud infrastructure providers. This was about 279% more than the same time last year and around 41% more than the last quarter.

Gaming revenues clocked in at $2.86 billion, beating expectations of $2.68 billion. This was 81% higher year-on-year and 15% more than the last quarter.

Investors will now be waiting to see if Nvidia can beat expectations once again on the 21 February.

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