One of the most profound changes in the technology landscape in recent years has been developments in artificial intelligence (AI). There’s a strong argument that the arrival of AI early last year was one of the biggest sparks that ignited the current bull market rally. ChatGPT heralded the arrival of generative AIand since its release in November 2022, the S&P500 is up 46%, while the Nasdaq Composite is up 67% (at the time of writing).
While there have been numerous beneficiaries of this secular tailwind, one of the most notable has been Nvidia (NASDAQ: NVDA). In a nutshell: that of the company graphics processing units (GPUs)that were originally developed to create lifelike visuals in video games proved just as adept at powering AI models.
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The resulting run on Nvidia’s chips delivered incredible financial results and sent the stock into the stratosphere. Since the start of last year, Nvidia shares have risen more than 900% (as of Thursday’s market close), making the company a stock market darling.
Nvidia has a lot to do with its financial results next week. Let’s take a look at the lead-up to this critical quarter, what Wall Street is saying and what investors can expect.
As technologists began to understand the implications of generative AI in early 2023, demand for Nvidia’s AI-centric processors soared from zero to 60 in just a few months. In the second quarter of fiscal 2024 (ending July 30), the results were no less then amazing. Nvidia posted record revenue of $13.5 billion, up 101% year over year, while adjusted earnings per share (EPS) of $2.70 rose 429%. Earnings per share in terms of generally accepted accounting principles (GAAP) were even more striking, with an increase of 854%.
The next four quarters were equally impressive, with record and triple-digit revenue and profit growth in each quarter. Nvidia’s second quarter for fiscal 2025 (ending July 28) was the last in the series. Record revenues of $30 billion rose 122% year over year, while adjusted earnings per share of $0.68 rose 152%. It’s worth noting that investors were concerned about Nvidia’s gross margin coming in lower, but it was up from a record high in the second quarter.
Wary investors knew the company’s triple-digit run would eventually come to an end, and management suggested the time had come. For the soon-to-be-announced third quarter (ending October 29), Nvidia is forecasting revenue of $32.5 billion, which would represent year-over-year growth of 79%.