Nvidia on Wednesday will report fourth-quarter revenue growth of more than three times, unchanged from the previous quarter, as it dominates the artificial intelligence market with chip supply.
But even such significant growth could disappoint some investors, who have become accustomed to Nvidia's performance exceeding analysts' expectations, which has led to its share price in a bull market since the start of 2023.
Nvidia recently overtook Amazon (Amazon.)com), which became the fourth-highest market capitalization company in the United States, is currently going head-to-head with Alphabet (Google's parent company) for the third spot. So far this year, the chip design company's share price has been nearly 50%.
However, Nvidia's stock price fell more than 5% on Tuesday as fears that the AI model would not meet Wall Street's high expectations sparked a sell-off.
If it continues, this could be Nvidia's biggest percentage drop in more than eight months.
If Nvidia warns again that U.S. restrictions on its chips to China are hurting its business and long-term prospects, then Nvidia's rally could ease if Nvidia can't address the shortage of its chip contractor TSMC.
In response to the latest round of U.S. export regulations, Nvidia has launched new products for the Chinese market, but these chips may also be banned from export like the first round of chips for the Chinese market.
Angus Shillington, a portfolio manager at Vaneck, a wealth management firm, said, "People think China is going to go its own way. He was referring to China's efforts to make its own chips. As of Jan. 31, Vaneck's semiconductor ETF holdings were worth more than 1$5.1 billion Nvidia**.
In the third quarter, Nvidia accounted for more than one-fifth of its revenue in China.
But in the end, the fiery demand for Nvidia's graphics processing units (GPUs) could overwhelm all concerns. NVIDIA GPUs are driving AI upgrades in large data centers around the world.
Tejas Dessai, an analyst at exchange-traded** (ETF) provider Global X, told Reuters:"Given the hot demand, Nvidia should be able to easily replace China's demand with other ** and large enterprises. "As of Feb. 13, Global X's robotics and artificial intelligence ETF held about $500 million worth of Nvidia**.
The Santa Clara, Calif.-based company is also likely to increase revenue by 200% year-over-year in the first quarter ending April, according to LSEG.
Morgan Stanley analysts said in a note that they expect Nvidia to beat expectations by 25%, thanks to a large number of orders. Goldman Sachs said that it is expected that the main business TSMC will increase chip packaging capacity in the first half of this year.
TSMC said in January that demand for advanced packaging is very strong, and TSMC cannot provide enough capacity to support customers, and this bottleneck will continue into next year. It plans to invest nearly 28$700 million in a factory as it looks to double its packaging capacity.
Nvidia) can't exceed (expected) because of capacity demand. That's what's holding them back. Otherwise, there may be a bigger impact. "G., an investment company that holds Nvidia's **p.Inge Heydorn, a partner at Bullhound, said.
In May last year, Nvidia shocked investors by posting May-July revenue** that beat analysts' expectations by nearly 54% and sparked a surge in AI stocks**. Since then, the company's ** has been a surprise to analysts, but to a lesser extent.
Vaneck's Hillington said he didn't expect such a big surprise.
In the first three quarters of 2023, Nvidia reported quarterly revenue that was 10% to 20% higher than analysts' expectations.