This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
One of the most-watched events of the month -- at least in technology and financial circles -- may be what's happening on November 20. Artificial intelligence (AI) powerhouse Nvidia (NASDAQ: NVDA) is set to offer us a look at its latest earnings figures and an update on what may be its next major growth catalyst. If investors are happy with what they see, this already soaring stock -- with a 200%+ gain this year -- could surge.
The technology giant already has wowed the investment community quarter after quarter in recent times. It's beat earnings estimates for at least the past four quarters, earnings have surged in the triple digits, and it's secured gross margin levels of more than 70%. On top of this, Nvidia has achieved other successes such as being invited into the Dow Jones Industrial Average, and it even became the world's most valuable company earlier this month when its market cap surpassed that of Apple.
So it's clear investors are eager to hear an update from this market leader. But we're not completely in the dark right now. Nvidia and others have offered us some clues. Here's what to expect from the AI giant on November 20.
The most sought-after GPUs
First, though, a quick summary of Nvidia's path in recent times. The company sells the world's most sought-after graphics processing units (GPUs), chips that power crucial AI tasks such as the training and inferencing of models. Nvidia's GPUs stand out for their speed, and today's tech giants involved in AI projects are among the company's biggest customers -- from Microsoft to Meta Platforms.
All this has translated into enormous earnings growth for Nvidia over the past few years. For example, in the most recent quarter, Nvidia reported $30 billion in revenue -- a record and a higher level of revenue than it brought in during an entire year just a couple of years ago. So the AI boom truly has helped Nvidia's earnings and share price -- the stock has soared over 2,600% in five years -- to take off.
Now, let's move along to what Nvidia may say during its earnings report this week. During its last report, Nvidia forecast fiscal 2025 third-quarter revenue of $32.5 billion, representing double-digit growth from the same period last year.
Though this is down from recent triple-digit gains, I don't see this as a slowdown. Considering the rapid pace of growth over just a few years, Nvidia's comparison quarters are now becoming more and more difficult. The company generated more than $18 billion in revenue during the third quarter last year -- this is already an extremely high level.
Nvidia's gross margins
Nvidia also predicted that gross margins, on a GAAP and non-GAAP basis (generally accepted accounting principles), would be 74.4% and 75%, respectively, in the third quarter of this fiscal year. And Nvidia forecast gross margin for the full year in the mid-70% range. This shows Nvidia is highly profitable on its sales, and the chart shows the company's been able to maintain these levels over the past year.
NVDA Gross Profit Margin data by YCharts
In the previous earnings report, Nvidia also offered us other reasons to be optimistic about the third quarter and beyond. The company said demand for its Blackwell architecture, which it expects to launch in the fourth quarter, has surpassed supply -- a clear sign that customers are flocking to Nvidia for this new platform.
Earnings reports from other tech giants support this idea.
"We have a wonderful partnership with Nvidia," Alphabet chief Sundar Pichai said during his company's recent earnings call. "We're excited for the GB200s, and we'll be one of the first to provide it at scale."
Meta, a big user of Nvidia GPUs, in its earnings call spoke of stepping up its investment in AI infrastructure after already making it the company's biggest investment area this year. Finally, Taiwan Semiconductor Manufacturing, which produces Nvidia's GPUs, reported double-digit gains in third-quarter revenue and spoke of high demand from customers.
"Insane" demand
"The demand is real, and I believe it's just the beginning of this demand," Taiwan Semiconductor chief executive officer C.C. Wei said during the earnings call. He also referred to a comment made earlier by Nvidia CEO Jensen Huang, who called demand for the new Blackwell chip "insane."
These bits and pieces of evidence from other companies in the industry suggest Nvidia will talk about ongoing strong demand for Blackwell and potentially its current architecture -- Hopper -- too. (Nvidia's earlier systems continue to sell because all Nvidia products work together seamlessly, so don't become obsolete. And companies eager to build out AI invest as soon as they can in what is available at the moment.)
Since Nvidia's begun its fourth quarter, the time when Blackwell is set to launch, the company might offer concrete details about how this is unfolding and speak about expectations for Blackwell revenue.
Could there be any trouble spots in the report? It will be important to listen for any comments on whether troubles facing Super Micro Computer, an equipment maker and customer of Nvidia, may impact sales or distribution of Blackwell systems in the coming months. And, separately, though high demand is fantastic, Nvidia must progress along the path to eventually serve all customers. Any information on that will be welcome.
That said, there are many reasons to be optimistic about Nvidia's upcoming report. Considering the company's earnings track record, comments from other heavyweights in the AI field, and the potential of Blackwell, we could be heading for yet another big moment for the stock and investors.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
