Nvidia, a leader in artificial intelligence (AI) semiconductors, is set to release its second-quarter earnings on the 26th (local time). The Wall Street Journal reported on the 23rd that Nvidia's performance could significantly impact the direction of the U.S. stock market, particularly for AI-related stocks, as well as the broader U.S. economy.
Market expectations are high that Nvidia will once again exceed forecasts. According to Bloomberg's estimates, Nvidia's second-quarter revenue is projected to reach $92 billion (approximately 127 trillion won), with earnings per share (EPS) expected to be $2.09. If these projections hold, it would mark a record 96% increase compared to the same period last year.
Nvidia has consistently outperformed market expectations for 14 consecutive quarters since the AI boom began. In the previous quarter, the company's net profit surged by 210% year-over-year, far exceeding Wall Street's anticipated growth rate of 126%.
Attention is focused on whether Nvidia's upcoming results will quell recent concerns about excessive investment in AI. Following earnings reports from Alphabet and Tesla, worries have spread across the tech sector regarding whether the substantial capital expenditures in AI are excessive.
Questions have also arisen about the profitability of AI companies. OpenAI recently informed investors that its second-quarter revenue increased by only 18% year-over-year, while losses widened.
With rising interest rates increasing financing costs and memory prices soaring, concerns about the investment capacity of AI companies have intensified.
Amid these investment pressures, Nvidia is expanding its influence in the ecosystem by supporting investments and infrastructure in the AI industry beyond simple semiconductor sales. Recently, Nvidia announced plans to raise up to $500 billion for AI infrastructure investments in collaboration with major Wall Street financial firms and has also invested in data center power supply companies.
Nvidia's earnings are expected to significantly impact the performance and stock prices of related semiconductor companies, data centers, and firms connected to AI investments. The Wall Street Journal noted that Nvidia's future semiconductor demand outlook will be a crucial indicator of whether the AI investment boom can continue.
However, high expectations may pose a burden on stock prices. Nvidia's stock has fallen after its last four earnings announcements. This suggests that if the results do not significantly exceed already high expectations, the stock could be volatile even with strong performance.
Despite this, the market remains optimistic about Nvidia's stock outlook. Frank Lee, global head of technology hardware and semiconductors at HSBC Global Research, recently raised Nvidia's target price from $325 to $360, citing the company's strategic partnerships with suppliers and its role as a key contributor to the open-source AI ecosystem.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.