Why Nvidia Is 'Stock Of The Town'
Nvidia's Q1 FY25 revenues could surge 3.43 times year-on-year to $24.6 billion, according to Bloomberg analysts.
Markets around the world are closely watching quarterly results of Nvidia Corp., scheduled to be announced on Wednesday. Wall Street has been optimistic of the semiconductor company's role in the generative AI surge, and its earnings stands to be somewhat of a litmus test on these bets.
Significant Rally
Nvidia's share price has surged 92% year-to-date and has more than tripled in the past 12 months. The tech giant now accounts for 5% of the rise in S&P 500 and has outpaced Nasdaq's 9% returns in the past month with a 19% advance.
The company's current market capitalisation stands at $2.3 trillion, making it the third most valued company in the world, after Microsoft Corp. and Apple Inc.
The company's stock price closed 0.64% higher at $953.86 on Wednesday, after hitting a record high of $954 per share. This means the stock is just a 4.8% gain away from reaching the $1,000 per share mark for the first time.
What Does Nvidia Do?
Founded in 1993 by Jen-Hsun 'Jensen' Huang, Chris Malachowsky, and Curtis Priem, Nvidia is an American semiconducter company and a leading manufacturer of high-end graphics processing units, commonly known as GPUs.
GPUs, are like super-powered sidekicks of central processing units in computers. They are not only essential for gamers, designers and video editors who need smooth graphics and fast processing, they have also emerged as the centre of the world of artificial technology, as their structure allows them to tackle complex calculations, super efficiently.
Why Is The Street Optimistic?
Nvidia's powerful graphics processing units have emerged at the forefront of the generative AI surge. The company's chip has already been used to power technologies like Google's Gemini and OpenAI's ChatGPT.
The key point that the street is watching out for in the quarterly revenues is if the company's financial performance reflects the optimism, and if the bullish bets have played out.
Analysts Expectations
Nvidia's Q1 FY25 revenues could surge 3.43 times year-on-year to $24.6 billion, according to consensus of analyst estimates on Bloomberg. Estimates also suggest revenues to rise 6.4 times when compared to the corresponding period a year ago.
More then $21 billion of the revenues are expected to come from the chipmaker's data center business—a segment that the company's chief executive Huang himself stated would drive growth going forward.
Centre Of AI Events
Nvidia has also found itself at the center of AI events hosted by OpenAI, Google and Microsoft. Last week, OpenAI’s technology chief personally thanked Huang for bringing them the most advanced chips needed.
A day later, Alphabet Inc. Chief Executive Officer Sundar Pichai noted the company's “longstanding partnership with Nvidia,” at Google’s annual developer conference. Google Cloud will be using Nvidia's 'Blackwell' graphics processing units in early 2025, he said.
Amazon's cloud services unit also stated on Tuesday that the company has decided to purchase the company's newer chip 'Blackwell', even as it has not halted any order of Nvidia's most advanced chips.
Five-Year Financial Performance
In the last five years, Nvidia's revenues and net profits have growth at a 53.69% and 80.35% compounded annual growth, respectively.
The tech company's net profit in FY24 stood at $30.01 billion compared to $2.84 billion in FY20.
