Stop us if you’ve heard this before: Nvidia’s earnings report Wednesday night is big deal on Wall Street. Results from the world’s most valuable chipmaker will give investors the clearest look into the state of the AI boom since … the last time the company reported its financials in late August. Enthusiasm about AI has been a major driver of stock market gains over the past two years — ever since the launch of ChatGPT kicked off an investment surge that has lifted far more than just technology companies. The winner’s circle has grown to include industrials, such as those making electrical components and energy-generation equipment, and even stodgy utilities that are expected to benefit from increased data center power consumption. Still, no company is more synonymous with AI than Nvidia, which holds a dominant position in the market for cutting-edge processors that underpin applications like ChatGPT. Its sales, profits and market capitalization have soared as a result. It has also created a dynamic where the company’s quarterly earnings reports are treated like make-or-break events , with seemingly boundless anticipation pushing the stock up into the release. That is how Nvidia’s better-than-expected results and solid outlook in August can still be followed by a nearly 20% decline in a little over a week. Then the buyers, deeming the swoon excessive, stepped back in and a new rally commenced. It is still underway as of Tuesday. Nvidia shares are up almost 40% since their most recent bottom, on Sept. 6. Along the way, Nvidia dethroned Apple as the world’s most valuable company , and it has not looked back . Now it’s earnings time again. The curse of sky-high expectations threatens to strike once more. “I say own it, don’t trade it,” Jim Cramer said Tuesday, as he tried to peer through the thicket of hype and stay focused on Nvidia’s bright multiyear outlook. He bestowed that “own it” designation on just two stocks, Nvidia and Apple. “There’s two things you need to know about Nvidia,” Jim continued. “One is that they have incredible demand, far more than they can handle. … And secondly, there’s no competition because no one is even remotely near them, including [fellow Club holding] AMD , which is a company I like very, very much.” Here’s a closer look at a few key questions surrounding Nvidia’s fiscal 2025 third-quarter report and the subsequent conference call at 5 p.m. ET. Overheated or overdone? Investors want to know whether the rollout of Nvidia’s next-generation AI chip platform Blackwell has hit any snags — specifically, whether a recent media report about Blackwell overheating in a certain configuration could result in a slower-than-expected ramp in revenue as the company and its customers work out a solution. Nvidia shares were lower Monday on the news. Few are doubting CEO Jensen Huang’s description of Blackwell demand as “insane.” The uncertainty, at this point, is about the timing. Nvidia has said it expects to ship “several billion dollars” in Blackwell sales in the current quarter, which stretches from November to January. Analysts currently project companywide revenue of $37.04 billion in the January quarter, according to FactSet. Nvidia’s guidance is critical in shaping Wall Street’s reaction to quarterly results, and it will be no different this time around. “If there was another company that was about to sneak up and was nibbling at them, then [Blackwell pushouts] would be a problem,” Jim said. “But there isn’t, so I don’t see anything to fret about, other than the fact I’m going to be ready for when they say, ‘Listen, we’re not going to ramp it in January. We’re going to ramp it in April.’ If there are people who are unhappy with that and want to sell it, then we’ve got to be ready.” In a note to clients Tuesday, analysts at Truist Securities acknowledged there could be technical and supply chain challenges facing Blackwell. Still, analysts said everything they’re hearing from Nvidia, its partners and industry contacts feels “overwhelmingly positive.” “While we expect to hear Blackwell called out as a revenue generator in both CQ3 and ramping in CQ4, we believe any slippage in Blackwell will likely be replaced with Hopper, offering downside protection on revenue,” analysts wrote. Hopper is the name of Nvidia’s current-generation AI chips, the H100 and H200. Margin health? Nvidia’s triple-digit revenue growth in recent quarters is widely expected to moderate due to the law of large numbers. As a result, gross margins are an increasingly important part of the investment story. Indeed, Nvidia’s third-quarter guidance for gross margin — and its implications for the fourth-quarter figure — was considered one of the very few blemishes in the August quarterly report . “Keep an eye on GM [gross margin],” analysts at Bank of America told clients in a note Sunday. Analysts said Nvidia needs to report something in the 73% to 74% range to keep its earnings per share for fiscal 2026 on track to reach the bull case of $5 or more. Here’s how to calculate gross margin: Start with a company’s revenue then subtract the costs of that revenue. That number is known as gross profit, or gross income. Gross profit divided by sales multiplied by 100 establishes the gross margin percentage. In Nvidia’s most-recent quarter, its gross margin was 75.7%. The rollout of Blackwell, even before chatter emerged about potential heat challenges, was understood as one factor pressuring margins in the near term. “Looking ahead to FY26, we see margins declining to the low 70s as Blackwell ramps with initially lower [production] yields,” Susquehanna analysts wrote in a Nov. 14 note. “In short, we expect another strong report but note elevated expectations into the print, with the narrative around the Blackwell ramp and GMs important to driving further upside in the stock.” Sovereign and software strength? What do Japan , Indonesia , India and Denmark all have in common? For our purposes, at least, they’re places that Nvidia’s Huang has visited in recent weeks to tout AI and discuss country-specific initiatives that the company is involved in. The trips and announcements are all part of Nvidia’s broader strategy on sovereign AI — a concept that refers to a country having control over its computing infrastructure and data in order to develop AI solutions that incorporate their own solutions. Nvidia said in August that it expected sovereign AI to generate low double-digit billions worth of revenue this fiscal year. Any updates to that projection would be welcome and help investors understand the demand coming from this burgeoning group of customers. U.S. tech giants like Microsoft , Meta Platforms and Amazon indicated in their recent earnings reports that they’re continuing to spend billions of dollars on AI computing infrastructure — no doubt, that’s great news for Nvidia. Sovereign AI represents a different kind of avenue for growth in the years ahead. Similarly, software is another longer-term bet that can help Nvidia offset some of the inherent cyclicality in hardware sales. In a note to clients Monday, analysts at Evercore ISI said that in addition to overall guidance, investors will likely be interested in Nvidia’s software growth — and specifically, its offering called AI Enterprise, which provides a range of tools to companies. In August, CFO Colette Kress said Nvidia was on track to finish the year at a roughly $2 billion annual run rate for software and support revenue. AI Enterprise “notably” contributed to the software expansion, according to Kress. (Jim Cramer’s Charitable Trust is long NVDA and AMD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Nvidia’s CEO Jensen Huang delivers his keystone speech ahead of Computex 2024 in Taipei on June 2, 2024.Â
Sam Yeh | AFP | Getty Images
Stop us if you’ve heard this before: Nvidia’s earnings report Wednesday night is big deal on Wall Street.
Results from the world’s most valuable chipmaker will give investors the clearest look into the state of the AI boom since … the last time the company reported its financials in late August.
