Nvidia Expected To Post Another Strong Quarter on AI Demand

AI hardware and chip companies have led the bounce in the Nasdaq 100 from its August low, with Nvidia the index’s top performer, up almost 30% and just 6.1% short of the all-time high, as of its last close. Peers Micron Technology Inc., Marvell Technology Inc., Super Micro Computer Inc., Broadcom Inc., Advanced Micro Devices Inc., and ARM Holdings Plc have all starred in the rebound.

As anticipation of Nvidia's (NVDA) upcoming earnings report builds, Raymond James analysts said they expect a solid quarter on demand for its artificial intelligence (AI) chips.

"We are looking for another strong quarter from NVDA despite the noise surrounding Blackwell delays," the analysts said, reiterating a "strong buy" rating for the stock.

Key Takeaways

As investors await Nvidia's fiscal second-quarter results, analysts at Raymond James are optimistic about a robust performance.

Their industry checks indicate that demand for artificial intelligence (AI) infrastructure remains strong, positioning Nvidia favorably in the AI landscape.

The analysts anticipate that a reported delay in Nvidia's Blackwell chip will have a "modest" effect on the company's third-quarter performance. However, this impact may be partially mitigated by increased demand for the Hopper chip, Blackwell's predecessor.

AI Demand is still increasing

The analysts noted that their discussions with hyperscale customers and supply chain partners indicate a continued strong demand for AI infrastructure, driven by increased spending from major tech companies. This trend is expected to bolster Nvidia's data center sales.

They also pointed out that Nvidia has exceeded revenue and outlook expectations in its last four earnings reports. Although Nvidia has consistently surpassed analysts' forecasts, the rising expectations for AI-focused companies have set a higher bar for the chipmaker.

On Wednesday, Nvidia's shares ended the day approximately 1% higher at $128.50, marking more than a doubling in value since the beginning of the year.

Nvidia’s AI NPCs will debut next year

Nvidia ACE, the company’s AI-driven system designed to enhance the vocal and conversational abilities of in-game characters, will make its debut in Mecha Break, a new multiplayer mech battle game slated for release on PC, Xbox X/S, and PlayStation 5 in 2025.

In Mecha Break, players will have the opportunity to pilot a diverse range of mechs, including assault, melee, and sniper types, in online battles fought both on the ground and in the air. The game is reminiscent of the Armored Core series, though it will focus solely on multiplayer and lack a single-player component.

Nvidia highlights that the game will allow players to interact with characters using natural language. The characters will also have the capability to "see" and recognize players and surrounding objects via their webcams, powered by GPT-4o. Additionally, the game will use a blend of Nvidia's on-device models and cloud-based AI to generate the voices of non-player characters (NPCs).

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