In 1879, American paleontologist Othniel Charles Marsh used the term “Brontosaurus” to describe a subfamily of dinosaurs.
The name comes from the Greek words for “thunder lizard” since Marsh reasoned that the ground must have thundered when such a massive critter came walking by.
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While Brontosaurus encounters are not an issue today- outside of “Jurassic Park”-there is an extremely rare breed of companies that are so big they can make investors feel the earth move under their feet.
TheStreet Pro’s Stephen Guilfoyle noted that “very few stocks can impact ‘the broader market’ significantly simply by showing up.”
“This late in the season, earnings season that is, there is but one name that can either rattle or cheerlead U.S. financial markets all by itself,” he said in his Aug. 26 column. “You knew from the very start that I was speaking of the one, the only, Nvidia and that firm’s CEO… Jensen ‘The Fonz’ Huang.”
Nvidia (NVDA) is scheduled to post quarterly earnings on Wednesday, and investors will focus on reports that delivery of its newly launched line of Blackwell processors, which are meant to be faster, cheaper, and more efficient than its H100 Hopper predecessors, could be delayed due to design flaws.
Wall Street forecasts point to a consensus bottom line of 64 cents per share, a 137% increase from the last year, with revenue more than doubling to $28.55 billion.
Jensen Huang, co-founder and chief executive officer of Nvidia Corp. Photographer: Annabelle Chih/Bloomberg via Getty Images
Analyst shares concerns about Nvidia’s performance
Nvidia shares tumbled on Aug. 5 after The Information reported that the chipmaker had told Microsoft (MSFT) and an unnamed cloud-service provider client the problem could hold up its production ramp and delivery dates by around three months.
Guilfoyle said there are some concerns around Nvidia’s performance, not just for the reported quarter but going forward.
Related: Analyst resets Nvidia stock price target before earnings
Investors have been scrutinizing capex spending levels for the companies that have become Nvidia’s biggest customers, which, to a large degree, he said, covers the rest of the so-called “Magnificent Seven,” a collection of the biggest names in the tech sector that includes Amazon (AMZN) , Tesla (TSLA) and Google parent Alphabet (GOOGL) .
“Have these companies seen an immediate financial benefit related to the increased spending?” Guilfoyle asked. “Not really. At least not in proportion to what is being spent. Will there be pressure to slow down on the spending? There could be.”
“Though, if that happens, the base of customers will likely broaden as those able to buy fewer chips may get their opportunity to play catch-up,” he added, adding that even with the delay of the newer, higher-tech chips “the slightly older, still very high-tech chips that the firm can sell are still selling quite briskly.”
Nvidia, which briefly surpassed Microsoft to become the world’s most valuable company, blew by Wall Street’s first-quarter expectations in May, as net income rose more than sevenfold from a year earlier to $14.88 billion.
Revenue more than tripled, rising to $26.04 billion from $7.19 billion in the previous year, as Huang proclaimed, “The next industrial revolution has begun.”
Shares were down 2.7% to $125.88 at last check. The stock is up 154% year-to-date and has surged 173.5% from a year ago.
Several analysts shared their thoughts about Nvidia’s upcoming earnings report with investors.
Analyst: Nvidia near-term business ‘strong’
Loop Capital kept a buy rating and $175 price target on Nvidia ahead of the company’s results this week, according to The Fly.
While its Blackwell B200 / GB200 has been delayed, it may not matter much as Hopper yields from TSMC (TSM) continue to improve. The firm said in a research note that the increased Hopper production through the fall may outweigh the amount of Blackwell forgone by the pushout.
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Morgan Stanley said that Nvidia’s stock has “largely shrugged off concerns around potential Blackwell delays – correctly so,” having created a buying opportunity, as expected, as the market looked through those concerns.
The near-term business is strong, and the firm will still see Blackwell ramp this year, as per initial guidance.
While there were some interim Blackwell delays, Morgan Stanley said it expects management to characterize that they are still in line for volume this quarter and ramping into fiscal year-end.
The firm said that the shift in timing doesn’t matter very much, as supply and customer demand have rapidly pivoted to H200 and H20 demand, which remains “robust.”
Morgan Stanley has an overweight rating and said Nvidia remains the “Top Pick” in its space.
Evercore said that hyperscale capital expenditures are one of the best indicators of demand for Nvidia systems and estimates they increased by 20% quarter-over-quarter in Q2. It notes that it is forecast for 8% and 10% quarter-over-quarter growth in Q3 and Q4.
The firm also said that commentary from hyperscalers —the major providers of massive data centers and cloud services—indicates evidence that AI is generating a return.
Furthermore, hyperscalers view the risk of underinvesting in AI today as far outweighing the risk of overinvesting at this early stage of the AI Investment cycle.
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