[Financial Results Preview] Is NVIDIA's financial results once again astonishing amid growing expectations for AI semiconductors?

NVIDIA's image processing semiconductors (GPUs) used in AI development almost exclusively support generative AI services such as the open AI Chat GPT service, and stock prices skyrocketed this year amid the AI boom, and the total market value exceeded 1.2 trillion dollars. Since there are no signs of slowing down in global AI competition,Growth momentum is expected to continueIt's been done.

Review of Q2 financial results
● Sales: 13.507 billion dollars (market forecast of 11.042 billion dollars), up 101% from the same period last year
● Adjusted diluted EPS: 2.70 dollars (market forecast 2.07 dollars), a sharp increase of 429% compared to the same period last year
● Adjusted gross profit margin: Surge from 45.9% in the same period last year to 71.2% (market forecast 70.1%)
● Data center division sales: 10.323 billion dollars (market forecast 7.981 billion dollars), rapid growth of 171% compared to the same period last year
● Gaming division sales: 2,486 billion dollars (market forecast 2.38 billion dollars), 22% increase over the same period last year
● Q3 sales forecast: 16 billion dollars (± 2%), exceeding market expectations of 13.1 billion dollars.

The previous quarter showed an acceleration in growth

NVIDIA's sales growth accelerated in Q2, up 88% from Q1 and 101% from a year ago. Earnings per share increased significantly to $2.70, up 429% from the same period last year. Data center sales increased 171% compared to the same period last year, accounting for 76% of total sales in Q2. The company's Q3 sales$16 billion, up 170% from the same period last yearIt shows predictions that will happen.

NVIDIA's data center sales were in Q3Reaches $12.8 billionIt is expected. The restrictions on AI semiconductor exports to China by the Biden administration are not expected to have a significant impact on NVIDIA's AI semiconductor sales. Major Chinese tech companies, such as Tencent and the video application “Kaishou,” have already purchased NVIDIA H800 and A800 chips in large quantities. Recently, the “H200,” which is a major upgrade of the GPU “H100,” which is optimized for AI, was announced. Compared to the H100, memory capacity has been increased by 76% and memory bandwidth by 43%, it is possible to process more advanced generative AI tasks, and is designed to compete with AMD's latest MI 300 XGPU. It is scheduled to be released in 2024 Q2.

NVIDIA's game division has strengthened overall PC market demand and AI integration in the game business,Continued recovery is expectedIt's been done. There is a possibility that “NVIDIA Avatar Cloud Engine (ACE) for Games,” a custom AI announced in May that can respond to in-game characters in natural language, will also contribute. Game division sales in Q3 compared to the same quarter in 2022Reaches $2.7 billion, an increase of 71.5%It is expected.

Goldman Sachs analyst Toshiya Hari maintained a “buy (buy)” evaluation and set a price target of $605. Hari said that considering the strong hardware and software offerings and pace of innovation, NVIDIAMaintain your position as an industry leaderI think so,Data center sales for Q3 and Q4 are expected to exceed forecasts of $12.4 billion and $13.6 billion. Oppenheimer analyst Rick Schafer maintained his outperformance. The price target was $650. Good Q3 performance and outlook are expected due to improved supply. He believes that the packaging (CoWoS) capacity of TSMC, a production contractor, will double at the end of 2024, and NVIDIA's supply restrictions on AI semiconductors will be relaxed by the end of next year.