Source: Fortune
Summary
Nvidia is set to release its earnings report, with analysts expecting revenue of $78.8 billion and earnings per share of $1.77. The company has beaten Wall Street’s estimates in 21 of the last 23 quarters. However, investors will be watching the gross margin percentage, which is expected to be around 75%. A miss on this metric could be a bearish sign, especially if it’s due to pricing pressure from hyperscalers like Microsoft and Meta, or rising manufacturing costs. Analysts’ consensus sits at 74.5%, slightly below Nvidia’s own guidance.
Our Reading
The numbers tell one story.
Nvidia’s gross margin is a key metric to watch, as it shows the company’s pricing power. A miss on this metric could be a sign of weakness. CEO Jensen Huang has bemoaned the fact that the stock can do everything right and still get punished. The company’s customers, hyperscalers like Microsoft and Meta, are looking for alternatives to Nvidia’s chips. Google, Amazon, and Microsoft are already developing their own AI chips, which could put pressure on Nvidia’s pricing. A gross margin print below 74.5% would be a bearish sign.
Author: Evan Null
