Shulou(Shulou.com)11/24 Report--

Chip designer Nvidia will release its new quarterly results in the early hours of Thursday, Beijing time, and investors expect the new results to give better-than-expected revenue guidance for the next quarter. The question that attracts the most attention now is: how much is the excess?

Nvidia has been the biggest beneficiary of the rise of ChatGPT and other generative artificial intelligence applications, almost all of which use Nvidia's graphics processing unit (GPU).

Nvidia's share price has tripled this year, increasing its market capitalization by more than $700 billion, making it the first chip company with a market capitalization of more than $1 trillion. On Monday, Nvidia shares closed up 8.5%, the biggest gain in nearly three months.

Some analysts warn that the soaring share price of Nvidia means it has little room for disappointment in the new quarter. Anything other than higher-than-expected earnings guidance for the next quarter could trigger a collapse in its share price.

In addition, Nvidia's performance in the second quarter is likely to determine the performance of the market this week, as most of the gains in the S & P 500 this year have come from a rebound in Nvidia and other large technology shares driven by artificial intelligence.

"I've been doing investment research in technology since 1994, but I've never seen an environment like this-too dependent on a single company," says Inge Heydorn, a partner at GP Bullhound, an AI market investment research firm. "AI is really the last pillar of growth and everyone is relying on it," Heydorn added. "if Nvidia is weak, there could be a considerable correction in the market."

Wall Street analysts expect Nvidia's revenue to reach $12.5 billion in the next quarter, up about 110 per cent from a year earlier. Only once in the past two years has Nvidia's performance guidance fallen short of Wall Street expectations.

Citigroup analysts predicted last week that Nvidia's revenue for the next quarter is expected to reach about $12 billion; some optimistic analysts expect the figure to reach $14 billion. Last week, at least 10 investment banks raised Nvidia's target share price, pushing the expected median to $500, 15.5 per cent higher than the previous day's closing price.

The $20, 000 chip speculation reached 40, 000 in may, and Nvidia's forward price-to-earnings ratio for the coming year soared to more than 80 times after predicting a revenue increase of more than 50% in the second quarter. But since then, the price-to-earnings ratio has fallen as analysts have raised their earnings forecasts. Currently, Nvidia's market is trading at about 40 times forward earnings, well above AMD's 29 times.

For the new quarterly results, investors will keep a close eye on the sales of Nvidia's data center division to determine whether its valuation is reasonable. Nvidia's data center division operates H100 chips for artificial intelligence.

Photo: the AI craze will boost Nvidia's soaring revenue in its data center division. Analysts estimate that Nvidia can currently meet only half of its chip demand. The H100 chip, which originally cost $20,000, is now sold for $40,000. And the trend is likely to continue for several quarters.

There are also some concerns in the indispensable market for AMD that the shortage of H100 may lead some buyers to turn to rival AMD. Currently, AMD is seeking to challenge Nvidia's H100 through its M1300X chip.

Harsh Kumar, an analyst at Piper Sandler, an investment bank, said: "AMD's chips may be up to 50% cheaper than Nvidia, and companies like Meta and Google may consider reducing costs."

Analysts expect AMD's M1300X to start shipping in the fourth quarter and could control about 10 per cent of the AI chip market next year. But they also warned that AMD would face an uphill battle in catching up with Nvidia's software CUDA. At present, CUDA has become the standard of artificial intelligence industry and has a great leading advantage.

"historically, leaders in semiconductors have generally had a 70 to 80 per cent share," says Kumar. "but customers still want to have a second supplier so that the price of the leader's products is not too high. Obviously, the second supplier in the artificial intelligence market is AMD."

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.