Nvidia has become world’s ‘most important stock,’ adding pressure to upcoming earnings report
Nvidia CEO Jensen Huang makes a speech at an event at COMPUTEX forum in Taipei, Taiwan June 4, 2024.
Ann Wang | Reuters
For Nvidia investors, the past two years have been a joyride. But recently they’ve been on more of a roller coaster.
As the primary beneficiary of the artificial intelligence boom, Nvidia has seen its market cap expand by about nine-fold since the end of 2022. But after reaching a record in June and briefly becoming the world’s most valuable public company, Nvidia proceeded to lose almost 30% of its value over the next seven weeks, shedding roughly $800 billion in market cap.
Now, it’s in the midst of a rally that’s pushed the stock within about 7% of its all-time high.
With the chipmaker set to report quarterly results on Wednesday, the stock’s volatility is top of mind for Wall Street. Any indication that AI demand is waning or that a leading cloud customer is modestly tightening its belt potentially translates into significant revenue slippage.
“It’s the most important stock in the world right now,” EMJ Capital’s Eric Jackson told CNBC‘s “Closing Bell” last week. “If they lay an egg, it would be a major problem for the whole market. I think they’re going to surprise to the upside.”
Nvidia’s report comes weeks after its mega-cap tech peers got through earnings. The company’s name was sprinkled throughout those analyst calls, as Microsoft, Alphabet, Meta, Amazon and Tesla all spend heavily on Nvidia’s graphics processing units (GPUs) to train AI models and run massive workloads.
In Nvidia’s past three quarters, revenue has more than tripled on an annual basis, with the vast majority of growth coming from the data center business.
Analysts expect a fourth straight quarter of triple-digit growth, but at a reduced pace of 112% to $28.7 billion, according to LSEG. From here, year-over-year comparisons get much tougher, and growth is expected to slow in each of the next six quarters.
Investors will be paying particularly close attention to Nvidia’s forecast for the October quarter. The company is expected to show growth of about 75% to $31.7 billion. Optimistic guidance will suggest that Nvidia’s deep-pocketed clients are signaling an ongoing willingness to open their wallets for the AI buildout, while a disappointing forecast could raise concern that infrastructure spending has gotten frothy.
“Given the steep increase in hyperscale capex over the past 18 months and the strong near-term outlook, investors frequently question the sustainability of the current capex trajectory,” analysts at Goldman Sachs, who recommend buying the stock, wrote in a note last month.
Much of the optimism heading into the report — the stock is up 8% in August — is due to comments from top customers about how much they’re continuing to shell out for data centers and Nvidia-based infrastructure.
Last month, the CEOs of Google and Meta enthusiastically endorsed the pace of their buildouts and said underinvesting was a greater risk than overspending. Former Google CEO Eric Schmidt recently told students at Stanford, in a video that was later removed, that he was hearing from top tech companies “they need $20 billion, $50 billion, $100 billion” worth of processors.
But while Nvidia’s profit margin has been expanding of late, the company still faces questions about the long-term return on investment that clients will see from their purchases of devices that cost tens of thousands of dollars each and are being ordered in bulk.
During Nvidia’s last earnings call in May, CFO Collette Kress provided data points suggesting that cloud providers, which account for over 40% of Nvidia’s revenue, would generate $5 in revenue for every $1 spent on Nvidia chips over four years.
More such stats are likely on the way. Last month, Goldman analysts wrote, following a meeting with Kress, that the company would share further ROI metrics this quarter “to instill confidence in investors.”
Blackwell timing
Jensen Huang, co-founder and chief executive officer of Nvidia Corp., displays the new Blackwell GPU chip during the Nvidia GPU Technology Conference on March 18, 2024.
David Paul Morris/Bloomberg via Getty Images
The other major question facing Nvidia is the timeline for its next-generation AI chips, dubbed Blackwell. The Information reported earlier this month that the company is facing production issues, which will likely push big shipments back into the first quarter of 2025. Nvidia said at the time that production was on track to ramp in the second half of the year.
The report came after Nvidia CEO Jensen Huang surprised investors and analysts in May by saying the company will see “a lot” of Blackwell revenue this fiscal year.
While Nvidia’s current generation of chips, called Hopper, remain the premium option for deploying AI applications like ChatGPT, competition is popping up from Advanced Micro Devices, Google and a smattering of startups, which is pressuring Nvidia to maintain its performance lead through a smooth upgrade cycle.
Even with a potential Blackwell delay, that revenue could just get pushed back into a future quarter while boosting current Hopper sales, especially the newer H200 chip. The first Hopper chips were in full production in September 2022.
“That shift in timing doesn’t matter very much, as supply and customer demand has rapidly pivoted to H200,” Morgan Stanley analysts wrote in a note this week.
Many of Nvidia’s leading customers say they need the additional processing power of Blackwell chips in order to train more advanced next-generation AI models. But they’ll take what they can get.
“We expect Nvidia to deemphasize its Blackwell B100/B200 GPU allocation in favor of ramping up its Hopper H200s in” the second half of the year, HSBC analyst Frank Lee wrote in a August note. He has a buy rating on the stock.
Courtesy: Opendoor
With Opendoor shares up almost fivefold since the beginning of July and trading volumes hitting record levels, CEO Carrie Wheeler thanked investors for their “enthusiasm” on Tuesday’s earnings call.
“I want to acknowledge the great deal of interest in Opendoor lately and that we’re grateful for it,” Wheeler said, even as the stock sank more than 20% after hours. “We appreciate your enthusiasm for what we’re building, and we’re listening intently to your feedback.”
Prior to its recent surge, Opendoor’s stock had been mostly abandoned, falling as low as 51 cents in late June. The situation was so dire that the company was considering a reverse split that could lift the price of each share by as much 50 times as a potential way to keep its Nasdaq listing. Opendoor said last week that it’s back in compliance and canceled the reverse split proposal.
Opendoor’s business is centered around using technology to buy and sell homes, pocketing the gains. The company was founded in 2014 and went public through a special purpose acquisition company (SPAC) during the Covid-era boom of late 2020. But when interest rates began climbing in 2022, higher borrowing costs reduced demand for homes.
Revenue sank by about two-thirds from $15.6 billion in 2022 to $5.2 billion last year.
Much of the stock’s bounce in the past six weeks was spurred by hedge fund manager Eric Jackson, who announced in July that his firm had taken a position in Opendoor. Jackson said he believes Opendoor’s stock could eventually get to $82. It closed on Tuesday at $2.52, before dropping below $2 in extended trading.
Jackson’s bet is that a return to revenue growth and increased market share will lead to profitability, and that investors will start ascribing a reasonable sales multiple to the business.
The turnaround isn’t yet showing much evidence of working. For the second quarter, Opendoor reported a revenue increase of about 4% to $1.57 billion. Its net loss narrowed to $29 million, or 4 cents a share, from $92 million, or 13 cents, a year earlier.
In the current quarter, Opendoor is projecting just $800 million to $875 million in revenue, which would represent a decline of at least 36% from a year earlier. Opendoor said it expects to acquire just 1,200 homes in the the third quarter, down from 1,757 in the second quarter and 3,504 in the third quarter of 2024. It’s also pulling down marketing spending.
“The housing market has further deteriorated over the course of the last quarter,” finance chief Selim Freiha said on Tuesday’s earnings call. “Persistently high mortgage rates continue to suppress buyer demand, leading to lower clearance and record new listings.”
Wheeler highlighted Opendoor’s effort to expand its business beyond so-called iBuying and into more of a referrals business that’s less capital intensive. She called it “the most important strategic shift in our history.”
Investors, who have been bidding up the stock in waves, were less than enthused with what they heard. But at least there are finally people listening.
“This increased visibility is an opportunity to tell our story to a broader audience,” Wheeler said. “We intend to make the most of it.”
Charles Liang, CEO of Super Micro, speaks at the Computex conference in Taipei, Taiwan, on June 1, 2023.
Walid Berrazeg | Sopa Images | Lightrocket | Getty Images
Super Micro Computer shares slid 15% in extended trading on Tuesday after the server maker reported disappointing fiscal fourth-quarter results and issued weak quarterly earnings guidance.
Here’s how the company did in comparison with LSEG consensus:
- Earnings per share: 41 cents adjusted vs. 44 cents expected
- Revenue: $5.76 billion vs. $5.89 billion expected
Super Micro’s revenue increased 7.5% during the quarter, which ended on June 30, according to a statement.
For the current quarter, Super Micro called for 40 cents to 52 cents in adjusted earnings per share on $6 billion to $7 billion in revenue for the fiscal first quarter. Analysts surveyed by LSEG were looking for 59 cents per share and $6.6 billion in revenue.
For the 2026 fiscal year, Super Micro sees at least $33 billion in revenue, above the LSEG consensus of $29.94 billion.
Super Micro saw surging demand starting in 2023 for its data center servers packed with Nvidia for handling artificial intelligence models and workloads. Growth has since slowed.
The company avoided being delisted from the Nasdaq after falling behind on quarterly financial filings and seeing the departure of its auditor.
As of Tuesday’s close, Super Micro shares were up around 88% so far in 2025, while the S&P 500 index has gained 7%.
Executives will discuss the results on a conference call starting at 5 p.m. ET.
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