Nvidia is poised to announce stronger-than-anticipated fiscal second-quarter results later this month, primarily driven by robust performance in its data center sector, as indicated in a recent analysis by UBS. The brokerage projects that revenue from the data center division could reach as high as $26.3 billion for the July quarter, significantly surpassing the consensus estimate of $25 billion.
This anticipated growth would represent a remarkable quarter-over-quarter increase of 17%. Following this announcement, Nvidia's stock saw a notable uptick of 4.7% in afternoon trading. UBS analyst Timothy Arcuri highlighted that several indicators suggested a bullish outlook for the data center business.
Notably, Super Micro Computer has reported impressive results, attributed to heightened demand for Nvidia's Hopper graphics processing units. Additionally, Taiwan Semiconductor has shown solid quarter-to-quarter growth in the realm of high-performance computing as detailed by Arcuri. The UBS report also noted encouraging data points from other key players in the industry, including gains in King Yuan Electronics' data processing segment and strong results in artificial intelligence server sales from Quanta. Although Taiwan's data processing export statistics suggest that second-quarter revenues for the data center segment may fall short of $25 billion, UBS cautions that these figures can exhibit significant variability concerning Nvidia's performance.
Moreover, these Taiwanese data figures do not account for the anticipated ramp-up of Nvidia's H20 chips in China, nor do they encompass other substantial revenue streams for Nvidia, such as its networking business, Arcuri elaborated. In their updated forecast, UBS models an overall revenue figure of $29.93 billion for Nvidia, with adjusted earnings per share projected at $0.68.
Both of these predictions exceed Wall Street's expectations, which stand at $28.6 billion for revenue and $0.64 for earnings per share. Nvidia is scheduled to release its earnings report for the period on August 28. While gaming revenue is expected to show a slight increase of 3%, reaching $2.7 billion on a quarter-over-quarter basis, this figure aligns with Street expectations but remains significantly lower than the five-year seasonal median growth rate of 11%. Looking ahead, there are questions about guidance related to the upcoming release of Nvidia’s generative AI GPU platform, Blackwell.
On a call with analysts following the company’s first-quarter earnings, management indicated that Blackwell is set to make a substantial impact on revenue in 2024. However, shipments are not expected to commence until mid-December, according to Arcuri..