Nvidia's fiscal third-quarter results are due Nov. 20. Analysts expect Nvidia's Q3 revenue to be $33.091 billion, adjusted net income to be $18.464 billion, and adjusted EPS to be $0.739, according to Bloomberg's unanimous expectations.
Previous Quarter Review
In August, Nvidia reported earnings that beat Wall Street views. Sales of $30.04 billion were higher than $28.7 billion analysts expected and came in 122% ahead of the year-earlier quarter.
Earnings also came in above views of 65 cents, at 68 cents per share. That was 152% higher than the prior year. The artificial intelligence chip leader also guided higher for the current quarter with sales of $32.5 billion vs. views of $31.7 billion.
Earnings have moved Nvidia stock in 2023 and 2024. In 2023, Nvidia had a huge 239% run.
Huang sold $580 million of Nvidia stock from June 14 through Aug. 9, based on a trading plan.
Third-Quarter Earnings Ahead
Analysts polled by FactSet expect sales to increase 122% to $30 billion and earnings of 68 cents per share, which would be 152% higher than the prior year.
Recent news shows demand for its AI chips remains high. The chief investment officer at UBS Global Wealth Management noted that "Big Tech's combined capex [capital expenditure] spending of $218 billion this year and another $254 billion in 2025 bodes well for the AI investment thesis."
Meanwhile strong AI data center demand helped Vertiv (VRT) beat earnings estimates for its September quarter.
In October, Chief Executive Jensen Huang said that a design flaw in its next-gen Blackwell chip had been fixed. Earlier, yields were low but AI-chip maker Taiwan Semiconductor (TSM) helped "recover from that yield difficulty and resume the manufacturing of Blackwell at an incredible pace."
Blackwell GPUs Poised to Drive Record Profits in Q4 and Beyond
Nvidia's revenue is on a rapid growth trajectory, with Q3 FY25 forecasts of $32.5 billion, reflecting an 81.81% YoY increase. For FY24, revenue is expected to reach $60.92 billion, driven largely by demand for its new-generation GPUs, Hopper and Blackwell. Blackwell, in particular, is anticipated to generate substantial revenue as it begins mass production in Q4 2024. With unit prices ranging from $30K–$40K and demand exceeding supply, Nvidia is well-positioned to capitalize on the expanding AI and data center market.
Operating margins are also improving, with H1 FY25 revenue at $56.08 billion and a 68% operating margin, up from 61% in FY24. This is largely due to high-margin data center sales, which made up 78% of FY24 revenue. Nvidia’s margin growth and strong revenue trajectory reflect enhanced production efficiency, supporting long-term valuation potential. For FY25, total revenue could reach $125.78 billion, a 106.46% YoY increase.
The ramp-up of Blackwell chips is expected to contribute significantly, with Q4 2024 shipments projected at 150K–200K units and reaching 500K–550K in Q1 2025. The high unit price could push Blackwell revenues over $30 billion within two quarters. Nvidia’s increased R&D spending, focused on next-generation GPUs, also reinforces its competitive position in AI and high-performance computing.
Nvidia's liquidity is robust, with free cash flow rising to $26.9 billion in FY24 and H1 FY25 already generating $28.4 billion. Strategic capital allocation includes a $14.9 billion stock buyback in H1 FY25 and a $50 billion repurchase authorization. This buyback enhances stock value by reducing outstanding shares and increasing per-share earnings, as demand for GPUs in AI applications continues to surge across industries.
Supply Chain Woes: Nvidia Faces Risks from Super Micro's Financial Instability
Nvidia faces emerging supply chain risks due to its heavy reliance on Super Micro Computer (SMCI) for AI server components. Recent financial reporting issues at Super Micro, including a potential delisting risk, have forced Nvidia to reroute orders to alternative suppliers like Gigabyte and ASRock. This immediate shift underscores Nvidia's vulnerability to operational disruptions from key suppliers, which could lead to delivery delays and increased costs impacting its AI and data center product fulfillment.
Super Micro’s financial instability could have a cascading effect, raising concerns about Nvidia’s ability to consistently meet surging demand for AI solutions. Reports suggest that Super Micro’s financial struggles, compounded by auditor resignations and investigations, may indicate deeper structural weaknesses in the supply chain. Nvidia’s need to rely on alternative suppliers may pose challenges as these partners, though expanding, might lack Super Micro’s capacity, potentially resulting in higher production costs and impacting Nvidia's competitive pricing.
In the long term, Nvidia’s dependency on a limited set of suppliers could amplify operational risks if other partners face similar challenges. Any additional disruptions could lead to increased production costs, delays, and revenue losses, potentially affecting Nvidia’s market valuation and profitability in the high-stakes AI sector.
Analysts' opinions
Analysts at Piper Sandler see a 20% upside for the stock and raised their price target to $175 from $140 and made it their top large-cap pick on Monday. Nvidia is positioned to gain most from the increase in the total AI accelerator market which they see will be $70 billion in 2025.
Melius Research analysts also raised their price target to $185 from $165 and maintained their buy rating.
Morgan Stanley analyst Joseph Moore sees supply constraints holding back Nvidia from issuing larger upward revisions to its revenue forecasts. But he still sees "several billion" in January-quarter sales for Blackwell as well as modest growth for the Hopper line."We are back to fully supply constrained on new products, which could limit upside on current quarter and outlook," said Moore, who lifted his Nvidia price target by $10 to $160 a share in a note published Monday.
“We estimate…servers with Nvidia data center chips drove 19% of demand in ’23, but will drive about 66% of [data-center] demand in ‘25 & ‘26 and over 80% in ‘27,” wrote Jefferies analyst Jonathan Petersen in a recent research note. Petersen has a Buy rating on Nvidia stock.
UBS analyst Timothy Arcuri is backing Nvidia to beat that, projecting quarterly revenue of around $34.5 billion. He also expects Nvidia to guide for revenue of around $37 billion for the January quarter.
