Nvidia (NASDAQ:NVDA) stock has moved away from record high it reached just prior as the firm nears its coming first-quarter earnings report, due to be released after the close of trade today. The report will be watched by investors with keen interest, as the company has been a key driver of the AI boom that’s moved markets over the past year and a half.
The consensus among Wall Street analysts is that Nvidia will report revenue and earnings that have grown by more than 200% and 400%, respectively, compared to the first quarter last year. These increases are underpinned by the continued high demand for its chips amid the ongoing AI boom.
According to data from Bloomberg, analysts expect adjusted earnings per share to reach $5.65 on revenue of $24.69 billion. In the same quarter last year, the company reported adjusted EPS of $1.09 on revenue of $7.19 billion.
Nvidia’s stock has seen remarkable growth over the past year, climbing by over 200% and hitting a record high on Tuesday. Since the stock market lows in October 2022, the stock has increased by nearly 700%. Shares were down about 0.4% in premarket trading on Wednesday.
The majority of Nvidia’s revenue is expected to come from its Data Center business, which is projected to reach $21 billion, up from $4.28 billion in Q1 last year. Meanwhile, the Gaming division, once the largest segment, is expected to see revenue of $3.5 billion, up from $2.24 billion in the same quarter last year.
Ahead of Nvidia’s earnings release, Stifel analyst Ruben Roy raised his price target on the company’s shares to $1,085 from $910, expressing confidence that Nvidia will exceed expectations and raise its guidance for the next quarter.
Demand for Nvidia’s chips from hyperscalers such as Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG, GOOGL), Meta (NASDAQ:META), Microsoft (NASDAQ:MSFT), and others has been a key driver of the company’s performance, and thus Wednesday’s report will be key in gauging the industry’s appetite for further AI investment.
However, concerns have been raised by some analysts, including those at BofA Global Research and Loop Capital, about the transition from Nvidia’s current Hopper line of AI chips to its Blackwell line, which could have an impact on overall sales. It is feared that customers may hold off on placing orders for Hopper chips while they wait for the more powerful Blackwell products to be rolled out.
Additionally, Nvidia faces competition from its customers who are building their own in-house AI chips. Companies such as Amazon, Google, and Microsoft are either using or developing their own AI chips, which could potentially erode Nvidia’s market share. AMD (NASDAQ:AMD) and Intel (NASDAQ:INTC) are also gaining traction with their AI chip offerings.
During its Build conference on Tuesday, Microsoft announced that it would offer AMD’s MI300X chips to developers, alongside Nvidia’s chips, indicating a diversified approach to AI hardware use.