Nvidia will announce its second-quarter results on Wednesday – a key test for AI trading

AI giant Nvidia (NVDA) will report its second-quarter earnings after the market closes on Wednesday. Nvidia's announcement — the most eagerly awaited earnings of the quarter — will send ripple effects throughout the technology sector as investors look for signs that AI trading will continue to dominate market conversations in the second half of the year.

Nvidia stock is up nearly 160% year-to-date and more than 60% over the past six months. Rival AMD's (AMD) stock price is up 2% year-to-date and down about 14% over the past six months.

Intel (INTC) shares have plunged 60% year-to-date and are down 53% over the past six months as the company continues to struggle with its massive turnaround efforts.

For the quarter, Nvidia is expected to report adjusted earnings per share (EPS) of $0.65 on revenue of $28.7 billion. This represents a 139% increase in EPS and a 113% increase in revenue compared to the same period last year, when Nvidia reported EPS of $0.27 and revenue of $13.5 billion.

Nvidia is the world leader in AI chip design and software, controlling between 80 and 95 percent of the market, according to Reuters. And the company is expected to maintain that lead as it begins rolling out its next Blackwell series of chips.

And while The Information has reported on a possible delay in Blackwell shipments, analysts at firms like Goldman Sachs, KeyBanc and Loop Capital believe this won't be a major problem for Nvidia in the short term.

“Our work suggests that Blackwell is indeed late, as we already [Aug. 8]it might be 120 days rather than 90 days … although that may not be so important, [1)] TSMC’s hopper yields continue to improve and [2)] The amount of increased Hopper production through the fall could exceed the amount of Blackwell production lost due to the relocation,” said Ananda Baruah, managing director of Loop Capital, in a note to investors.

For the quarter, Nvidia's all-important data center business is expected to bring in revenue of $24 billion, up 142% from the $10.3 billion the segment brought in in the same quarter last year. Wall Street is expecting Nvidia to not only beat its second-quarter expectations but also raise its third-quarter forecast, which could be bolstered by the recent earnings beat from TSMC (TSM). TSMC produces chips for Nvidia.

However, this jump in data center growth is less than the 426% revenue growth last quarter and 408% in the fourth quarter of last year.

That growth is expected to slow further in the third quarter, when the company's data center revenue is expected to reach $27.7 billion, up 91% year over year.

The story continues

“We expect Nvidia to generate nearly $30 billion in data center revenue in October. And you know the law of large numbers. [is] “, Stifel CEO Ruben Roy told Yahoo Finance on Monday. “But again, we believe the company's profitability will continue to increase.”

Nvidia's competitors aren't resting on their laurels either. In early August, AMD announced it was acquiring ZT Systems in a deal valued at $4.9 billion. The move gives AMD more firepower to build AI system servers, which has been a major catalyst for Nvidia's own sales.

And while this could give AMD a revenue boost, it doesn't mean Nvidia's reign as AI king will be under serious threat any time soon.

“There are emerging competitors like AMD that are starting to take a little bit of market share,” Roy said. “But when you look at the entire infrastructure spending cycle … which we believe is going to continue to increase, Nvidia seems to us to be best positioned to take advantage of that. [spending].”

In addition to AI revenue, Nvidia is expected to report $2.7 billion in gaming revenue. Once Nvidia's primary source of revenue, gaming has become a far smaller part of the company's story. Still, the segment is far larger than Nvidia's other businesses, including professional visualization and automotive.

Email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.

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