Earnings: Nvidia’s AI Dominance Faces Market Scrutiny This Week

Nvidia’s recent surge to the top of the tech market, temporarily surpassing Apple in market capitalization, was fueled by the explosive growth of artificial intelligence. The company’s powerful GPUs have become essential components for training and deploying AI models, making it a key player in the AI revolution.

Despite its impressive growth, Nvidia’s valuation has come under increased scrutiny amidst concerns of an AI market bubble. The recent sell-off in AI-related stocks, including Nvidia, reflects investor uncertainty about the long-term sustainability of the current AI boom. While the technology has shown tremendous promise, questions remain about its ability to deliver consistent returns on investment, particularly in the face of potential economic downturns or regulatory challenges.

As Nvidia prepares to report its quarterly earnings later this week on Thursday, Aug. 28 after the closing bell, market participants will be closely watching for signs of sustained growth in its data centre business, which is a major driver of its AI-related revenue.

Additionally, updates on the company’s next-generation Blackwell chips will be eagerly anticipated. These chips are expected to offer even more powerful computing capabilities, further solidifying Nvidia‘s position in the AI market. Recently, some sources have been reporting that these chips might be delayed by a few months due to potential design flaws.

Will Nvidia Report Higher-Than-Expected Again?

Nvidia’s 2025 first-quarter earnings exceeded analyst expectations, indicating continued strong demand for its AI chips. The company reported a significant increase in net income, rising from $2.04 billion, or 82 cents per share, to $14.88 billion, or $5.98 per share, year-over-year.

Data center sales remained the cornerstone of Nvidia’s business, contributing $22.6 billion in revenue during the quarter. This represents a substantial 427% increase compared to the same period last year, highlighting the growing reliance on AI technology across various industries.

Nvidia’s Data Center business has experienced remarkable growth in recent years, expanding from $3 billion in 2020, to $15 billion in fiscal 2023 to around $47.5 billion in 2024. Based on the company’s strong performance, Morningstar projects further growth to $111 billion in 2025 (a 133% growth), followed by a sustained compound annual growth rate of 23% over the next three years. This optimistic outlook is driven by anticipated increases in data center capital expenditures among leading enterprise and cloud computing customers.

Overall, Morningstar anticipates that Nvidia is likely to surpass its revenue guidance for the current quarter and deliver even stronger results for the upcoming October quarter. Based on compiled data from Visible Alpha, Nvidia could generate over $28.84 billion in sales this quarter, a rise of more than 100% over the same period last year. Additionally, net income could rise significantly, more than double to $14.95 billion over the prior year.

Despite this positive outlook, some market participants remain cautious about the company’s potential growth, citing constraints in the supply chain and delays on its next-generation chips that could limit revenue expansion.

Blackwell Chips’ Delays Could Hurt Nvidia’s Results in Fiscal 2025

Nvidia’s CEO, Jensen Huang, expressed optimism about the revenue potential of the upcoming Blackwell AI chips in 2025 during the last earnings call. However, recent reports have cast doubt on their timely production. Design challenges could lead to production delays, potentially affecting the company’s financial performance in the current fiscal year.

The Blackwell chip was initially anticipated to launch in 2024, offering a significant advancement in generative AI and accelerated computing. However, the delays may push back its availability to Nvidia’s big tech clients like Microsoft and Alphabet, among others.

The reports suggest that all three Blackwell SKUs will be delayed until the June quarter. This conclusion is based on the company’s statement that a three-month delay could prevent significant clusters of Blackwell from becoming operational as early as expected.

Nvidia has already announced plans for a new generation of AI chips, codenamed Rubin, which are expected to be available to customers in 2026. The company has committed to a regular release cycle for its AI chips, aiming to introduce new models every year.

Get Ready For Upcoming Volatility on Nvidia’s Stock

Nvidia’s stock price has rebounded significantly since its recent low, gaining over 40% in the wake of a market downturn triggered by the Bank of Japan’s unexpected interest rate hike and concerns about a potential U.S. recession and the AI sector’s future.

Taking into account its 10-for-1 stock split, Nvidia’s share price reached an all-time high of $140.72 on June 20. However, the stock has since experienced a minor pullback, currently trading at a discount of approximately 8% from its peak.

Technically, Nvidia’s shares are trading within the Ichimoku cloud, which is often interpreted as a neutral zone. Given the stock’s proximity to the upper boundary of the cloud, a positive earnings surprise could potentially propel the price beyond this resistance level and towards new highs. Conversely, a negative earnings report could lead to increased volatility and a downward price movement.

Conclusion

As Nvidia prepares to release its quarterly earnings report, investors are closely watching for signs of continued growth in the company’s AI-related business. While the company’s recent performance has been impressive, concerns about an AI market bubble and potential delays in the production of its next-generation Blackwell chips could introduce volatility into the stock price.

Disclaimer

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 66% and 83% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

ActivTrades Corp is authorised and regulated by The Securities Commission of the Bahamas. ActivTrades Corp is an international business company registered in the Commonwealth of the Bahamas, registration number 199667 B.

The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.

All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.

Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.