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Wall Street is very focused on Nvidia's (NVDA) upcoming earnings this week, especially given how much weight the tech giant has in the major US indexes (^GSPC, ^DJI, ^IXIC). While earnings paints a bit of the picture, is there more than just revenue that investors should focus on?
Stifel managing director & applied technology analyst Ruben Roy shares his insight into what investors should be watching out for from Nvidia's results.
Roy says that given investor expectations, it will need to be a beat-and-raise quarter for the chip giant.
Roy argues there is more than just earnings to look forward to: "From an R&D perspective, Nvidia is investing quite aggressively. They've accelerated the cadence at which they bring out compute technology to the marketplace. So we've got the H series of GPUs, Hopper 100, Hopper 200 out today. Nvidia you know, widely has talked about the Blackwell series which is coming out."
He follows that up with: "Just beyond that there's the new architecture that Nvidia announced earlier this year called Reuben that's coming out in 2026, so they're investing. They're investing on new technologies faster than we've ever seen."
The biggest test for the markets this week? Well, it is Nvidia, the highly anticipated results that we are going to get on Wednesday after the bell. The stock is up 160% so far this year. The chip maker's earnings are they going to spark a rally? We want to bring in Ruben Roy, he's Stifel's Managing Director and Applied Technology Analyst. Ruben, it's great to have you here. So I think the big question here for so many investors is whether or not this is going to be a beat and raise quarter for Nvidia. What do you think the setup looks like?
Hey, good morning. Thanks for having me. Well, I think it needs to be a beat and raise quarter because I think that's sort of built in to investor expectations. Certainly the discussions that we're having would suggest that there's widely anticipated expectations for a beat for the July quarter earnings and then a sort of a beat on the guidance for the October quarter. The focus, of course, is going to be on the data center segment, which is where all the AI action is, both for AI compute and AI networking. And I'd say the data points coming through June quarter earnings would suggest that the AI, as you mentioned, the AI trade is still on, the investment cycle is still on. The CapEx from the cloud service providers was up higher than expectations and I think the guidance and outlook for most of those companies was also up as you look for that towards the back half of the year. And then other supply chain companies, like Taiwan Semi, which manufactures Nvidia's chips, or Super Micro which makes a lot of the servers that are used in the cloud service provider networks also had really, really significant beats and raises. And so we think the setup's pretty strong here going into the print.
You know, Ruben, as we think about what we've heard over the course of this earnings season, companies who are getting out in front of their investors and their analysts and saying, "Well, here's why we need to spend this much because the risk of underinvesting in AI, I mean, the other side of that is making sure that you're getting ahead of the curve, getting ahead of the demand as well." How much should Nvidia continue to make sure that it's showing investors that it is investing itself and putting CapEx towards even more of those solutions that they could bring to data centers and what does that look like for investors as well here evaluating what that spend looks like going forward?
Yeah, Brad. That that is the biggest debate we're having with investors, which is this idea that, "Okay, there's a lot of investment going on today, but what's the ROI? What's the ROI look like? And when are we going to start to see some of these enterprise companies that are investing a lot today make make money on this stuff?" I'd say, you know, on your point about Nvidia, certainly from an R&D perspective, Nvidia's investing quite aggressively. They've accelerated the cadence at which they bring out compute technologies to the marketplace. So we've got the H series of GPUs Hopper 100, Hopper 200 out today. Nvidia has widely talked about the Blackbell series, which is coming out. And we can talk about that, you know, some chatter in the market about potential delays and whatnot. But that's on track, we think, to really ramp in 2025. And then just behind that, there's a new architecture that Nvidia announced earlier this year called Reuben that's coming out in 2026. So they're investing. They're investing on new technology faster than we've ever seen. And then, on the flip side, if you look at the M&A landscape, there's a lot going on. Early last week, AMD announced that they were going to buy DTP Systems, which is essentially a manufacturer of, you know, massive servers, AI servers, that then get installed in data center networks. And so, why do they do that? Well, they're doing that to acquire a lot of engineers that are experts in sort of the next generation of data center architectures, which are changing very, very quickly based on these compute technologies that companies like Nvidia and AMD are coming out with. And so there's a lot going on that would suggest that the investment cycle continues. And to your point, a lot of companies, I absolutely agree that we speak to, say they'd rather overinvest by a year than underinvest by a quarter.
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This post was written by Nicholas Jacobino