Nvidia second-quarter sales expected to double

Nvidia is expected to report a more than doubling of its second-quarter revenue on Wednesday, but even a slight miss could negatively impact its stock.

Investors, accustomed to Nvidia's impressive performance, will be anticipating even stronger results from the AI chip giant, News.Az reports citing Reuters.

A beat or a miss on Wall Street expectations could either stoke or shatter an AI rally on Thursday, a day after Nvidia reports earnings for the May-July period.

The company's stock has surged more than 150% this year, adding $1.82 trillion to its market value and lifting the S&P 500 to new highs. On Monday, it was down 2.2% in afternoon trading, weighing on the index.

The stock is valued at about 37 times its forward earnings, compared with an average of around 29 for the top six tech companies on the benchmark index that includes the chipmaker.

Tech heavyweights, including Microsoft, which are spending heavily to build out their AI infrastructure, have been buying Nvidia's powerful graphic processing units that allow large amounts of computing quickly. These chips are difficult to replace in present-day datacenters, which has sharply boosted Nvidia's fortunes.

Nvidia is expected to have recorded a year-over-year jump of about 112% in second-quarter revenue to $28.68 billion, according to LSEG data as of Aug. 23.

But its adjusted gross margin likely dropped more than 3 percentage points to 75.8% from the first quarter, burdened by the cost of a production ramp-up to meet growing demand.

Some investors are concerned about the company's ability to meet lofty expectations and have questioned the pace of spending on AI by Nvidia's largest customers.

These worries led to a 20% slump in Nvidia's stock through much of July and early August, though a recent recovery has left the stock just about 5% below its record high in June.

News.Az