In a flurry of anticipation over Nvidia's upcoming quarterly results, the tech giant's shares have surged, inching closer to their all-time high.
Riding the hype of the artificial intelligence (AI) wave, Nvidia's trajectory in recent weeks has been nothing short of spectacular.
The company, often hailed as the AI boom's top chipmaker, is now the subject of skyrocketing expectations as its third-quarter earnings announcement approaches.
Nvidia Set for Another Record Revenue Forecast
Reuters reports that Wall Street is abuzz with forecasts that Nvidia could forecast an astonishing 110% growth in third-quarter revenue, soaring to an eye-popping $12.50 billion.
The anticipation of such a meteoric rise in revenue has set the stage for a staggering 16.5% surge in Nvidia's shares over the past week alone.
This surge includes an 8% spike on Monday that had a tangible ripple effect, elevating broader markets and nudging Nvidia's stock to a mere 2.1% shy of its all-time high of $480.88, attained on July 14.
Analysts and experts are keeping a keen eye on this upcoming report. Dennis Dick, a market structure analyst at Triple D Trading, underlines the report's significance by stating, "It might be the most important report of this earnings season. We want to hear that they can build on the amazing quarter they had last quarter."
Nvidia's performance in the previous quarter, with its forecasts exceeding expectations, led to a rally not only in AI stocks but also among Big Tech companies, establishing it as a key driver in this year's US stock market rally.
Nvidia's Hold of the GPU Market
Nvidia's dominance in AI technology extends to chips used to power generative AI, like the widely acclaimed ChatGPT and similar services.
This stronghold has been reflected in its commanding control of approximately 80% of the graphic processing units (GPUs) market.
These specialized chips are indispensable for intensive AI computing tasks. Contrasting with Intel's generic central processing units (CPUs), Nvidia's GPUs exhibit remarkable efficiency for AI applications.
The AI arena is only poised to expand further. Analysts at Gartner predict that by 2026, over 15% of data centers will incorporate specialized chips, such as GPUs, up from a meager 3% in 2020. This augurs well for Nvidia's already substantial influence in the industry.
Notably, Advanced Micro Devices (AMD), Nvidia's closest rival, commands a market share of around 20% in the GPU market. With investments in AI and a series of chips tailored to rival Nvidia's fastest hardware, AMD is making strides. Meanwhile, Intel lags far behind, holding a mere fraction of the market at less than 1%.
The growing enthusiasm surrounding AI applications, exemplified by the popularity of ChatGPT, could potentially mark a turning point in the adoption of AI technology.
Lei Qiu, a technology fund portfolio manager at AllianceBernstein, underscores this phenomenon, stating, "While it is hard to pinpoint exactly how big AI is today as a percent of (Nvidia's) revenue, it has the potential to grow exponentially as large tech companies race to develop similar types of AI applications."
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