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NVIDIA’s second-quarter performance is likely to reflect the continued strength of its Datacenter business on the growing adoption of cloud-based solutions amid the growing hybrid working trend. An increase in Hyperscale demand and growing adoption in the inference market are likely to have been tailwinds in the to-be-reported quarter. The strong demand for its chips from large cloud service and consumer internet companies is anticipated to have aided the segment’s top-line growth in the second quarter.
Additionally, the Datacenter end-market business is likely to have mostly benefited from the growing demand for generative AI and large language models using GPUs based on NVIDIA Hopper and Ampere architectures. In the last reported financial results for the first quarter of fiscal 2024, the company’s revenues from the Datacenter business jumped 14% year over year and 18% sequentially, mainly due to growing investments in generative AI.
We believe that the trend is likely to have continued in the to-be-reported quarter. Our second-quarter revenue estimate for the data center end market is pegged at $8.02 billion, implying year-over-year growth of 110.6% and a sequential increase of 87.1%.
Investments in Generative AI to Boost the Top Line
Though AI has been around for years, the meteoric rise of OpenAI’s ChatGPT has captivated the world’s attention on the power of generative AI to augment human capability, suggesting that the AI boom may just get started.
Generative AI is a type of AI technology that can produce various types of content, including text, imagery, audio and synthetic data. It is driven by a large language model, which means it uses a lot of data to understand and generate conversations.
The growing demand to modernize the workflow across industries is expected to drive the demand for generative AI applications. The global generative AI market size is anticipated to reach $109.37 billion by 2030, according to a new report by Grand View Research. The market is expected to expand at a CAGR of 35.6% from 2023 to 2030.
The adoption of ChatGPT among enterprises has already proven generative AI technology’s usefulness across multiple industries, including marketing, advertising, customer service, education, content creation, healthcare, automotive, energy & utilities and video game development.
However, generative AI requires vast knowledge to create content and needs huge computational power. As a result, enterprises looking to create generative AI-based applications will require to upgrade their existing network infrastructure.
NVIDIA’s next-generation chips with high computing power can be the top choice for enterprises. The company’s CEO, Jensen Huang, already stated during the first-quarter fiscal 2024 earnings conference call that existing data centers are insufficiently equipped to handle growing AI workloads.
NVIDIA’s GPUs are already being applied in AI models, which is expanding its footprint in untapped markets like automotive, healthcare and manufacturing. The generative AI revolution is likely to create huge demand for its next-generation high computing powerful chips. NVIDIA expects its second-quarter fiscal 2024 revenues to reach $11 billion from $6.7 billion in the year-ago quarter, largely driven by surging AI investments across the data center end market.
Zacks Rank & Other Stocks to Consider
NVIDIA currently sports a Zacks Rank #1 (Strong Buy). Shares of NVDA have surged 196.3% year to date (YTD).
The Zacks Consensus Estimate for Workday's second-quarter fiscal 2024 earnings has been revised upward by a penny to $1.25 per share in the past 30 days. For fiscal 2024, earnings estimates have increased by 3 cents to $5.32 per share in the past 30 days.
Workday’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 13.1%. Shares of WDAY have rallied 34.1% YTD.
The Zacks Consensus Estimate for Manhattan Associates’ third-quarter 2023 earnings has been revised 5 cents northward to 77 cents per share in the past 30 days. For 2023, earnings estimates have moved 22 cents upward to $3.09 per share in the past 30 days.
Manhattan Associates’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 31.6%. Shares of MANH have rallied 53.2% YTD.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has remained unchanged at $1.90 per share in the past 60 days. For fiscal 2024, earnings estimates have remained unchanged at $7.44 per share in the past 60 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have risen 54.5% YTD.
Image: Shutterstock
Datacenter's AI Investment to Aid NVIDIA's (NVDA) Q2 Earnings
NVIDIA Corporation (NVDA - Free Report) is slated to report second-quarter fiscal 2024 results on Aug 23.
NVIDIA’s second-quarter performance is likely to reflect the continued strength of its Datacenter business on the growing adoption of cloud-based solutions amid the growing hybrid working trend. An increase in Hyperscale demand and growing adoption in the inference market are likely to have been tailwinds in the to-be-reported quarter. The strong demand for its chips from large cloud service and consumer internet companies is anticipated to have aided the segment’s top-line growth in the second quarter.
Additionally, the Datacenter end-market business is likely to have mostly benefited from the growing demand for generative AI and large language models using GPUs based on NVIDIA Hopper and Ampere architectures. In the last reported financial results for the first quarter of fiscal 2024, the company’s revenues from the Datacenter business jumped 14% year over year and 18% sequentially, mainly due to growing investments in generative AI.
We believe that the trend is likely to have continued in the to-be-reported quarter. Our second-quarter revenue estimate for the data center end market is pegged at $8.02 billion, implying year-over-year growth of 110.6% and a sequential increase of 87.1%.
NVIDIA Corporation Price and EPS Surprise
NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote
Investments in Generative AI to Boost the Top Line
Though AI has been around for years, the meteoric rise of OpenAI’s ChatGPT has captivated the world’s attention on the power of generative AI to augment human capability, suggesting that the AI boom may just get started.
Generative AI is a type of AI technology that can produce various types of content, including text, imagery, audio and synthetic data. It is driven by a large language model, which means it uses a lot of data to understand and generate conversations.
The growing demand to modernize the workflow across industries is expected to drive the demand for generative AI applications. The global generative AI market size is anticipated to reach $109.37 billion by 2030, according to a new report by Grand View Research. The market is expected to expand at a CAGR of 35.6% from 2023 to 2030.
The adoption of ChatGPT among enterprises has already proven generative AI technology’s usefulness across multiple industries, including marketing, advertising, customer service, education, content creation, healthcare, automotive, energy & utilities and video game development.
However, generative AI requires vast knowledge to create content and needs huge computational power. As a result, enterprises looking to create generative AI-based applications will require to upgrade their existing network infrastructure.
NVIDIA’s next-generation chips with high computing power can be the top choice for enterprises. The company’s CEO, Jensen Huang, already stated during the first-quarter fiscal 2024 earnings conference call that existing data centers are insufficiently equipped to handle growing AI workloads.
NVIDIA’s GPUs are already being applied in AI models, which is expanding its footprint in untapped markets like automotive, healthcare and manufacturing. The generative AI revolution is likely to create huge demand for its next-generation high computing powerful chips. NVIDIA expects its second-quarter fiscal 2024 revenues to reach $11 billion from $6.7 billion in the year-ago quarter, largely driven by surging AI investments across the data center end market.
Zacks Rank & Other Stocks to Consider
NVIDIA currently sports a Zacks Rank #1 (Strong Buy). Shares of NVDA have surged 196.3% year to date (YTD).
Some other top-ranked stocks from the broader technology sector are Workday (WDAY - Free Report) , Manhattan Associates (MANH - Free Report) and Salesforce (CRM - Free Report) . Workday and Manhattan Associates each sport a Zacks Rank #1, while Salesforce carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Workday's second-quarter fiscal 2024 earnings has been revised upward by a penny to $1.25 per share in the past 30 days. For fiscal 2024, earnings estimates have increased by 3 cents to $5.32 per share in the past 30 days.
Workday’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 13.1%. Shares of WDAY have rallied 34.1% YTD.
The Zacks Consensus Estimate for Manhattan Associates’ third-quarter 2023 earnings has been revised 5 cents northward to 77 cents per share in the past 30 days. For 2023, earnings estimates have moved 22 cents upward to $3.09 per share in the past 30 days.
Manhattan Associates’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 31.6%. Shares of MANH have rallied 53.2% YTD.
The Zacks Consensus Estimate for Salesforce's second-quarter fiscal 2024 earnings has remained unchanged at $1.90 per share in the past 60 days. For fiscal 2024, earnings estimates have remained unchanged at $7.44 per share in the past 60 days.
Salesforce's earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 15.5%. Shares of CRM have risen 54.5% YTD.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.