On November 20, the market will eagerly await the release of Nvidia’s fiscal 2025 third-quarter earnings report, which is expected to have a significant impact on the market. As a leading player in the artificial intelligence (AI) industry, Nvidia’s performance will be closely scrutinized by investors. The company’s revenue primarily stems from the sale of graphics processing units (GPUs) to tech giants such as Microsoft, Meta Platforms, and Alphabet, who have been investing billions in building and upgrading data centers to meet the growing demands of generative AI.
Recent earnings calls from these major tech customers have reaffirmed their commitment to expanding their AI infrastructure, with plans to further increase capital expenditures (capex) next year. Meta, in particular, anticipates a substantial growth in capex, with CEO Mark Zuckerberg emphasizing the potential of new AI advances to accelerate their core business. This bodes well for Nvidia, as a significant portion of the capex spending is expected to flow into their coffers.
The anticipated surge in capex could be attributed, in part, to the companies’ plans to upgrade their chips to Nvidia’s latest line, Blackwell. Although the official launch of Blackwell is slated for this quarter, reports suggest that there is already a year-long waiting list for these GPUs. The successful debut of Blackwell is crucial for Nvidia, as it aligns with their new yearly upgrade cadence for AI chips announced in October 2023. If Nvidia can continue to release new chips annually that outperform their predecessors, it will solidify their position as the dominant player in AI chipmaking.
Analyzing Nvidia’s stock performance in the weeks following its earnings reports over the past couple of fiscal years reveals an average upward move of 7.2% over a week. However, it is important to note that past results do not guarantee future outcomes. Various factors can influence a stock’s movement after earnings, and short-term fluctuations should not overshadow long-term investment strategies.