NVDA Stock: Nvidia Blackwell Chips Set for Launch

By Patricia Miller

Nov 21, 2024

Nvidia's record growth and strong demand for AI chips signal reassurance for shareholders. Stay informed for strategic insights.

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What You Need To Know

Nvidia (NASDAQ: NVDA) reported record Q3 results with revenue up 94% to $35.08 billion, driven by strong demand for AI-related products like the Hopper platform. Net income more than doubled to $19.31 billion, with earnings per share rising to $0.81. The data center revenue has doubled, largely driven by cloud service providers like Microsoft and Amazon, which represent half of this segment's earnings.

The company is transitioning to its more advanced Blackwell chips, which are in full production but face supply constraints that are expected to persist into fiscal 2026. These chips promise improved performance and connectivity compared to their predecessors. Nevertheless, CEO Jensen Huang reassured investors that Nvidia’s Blackwell chips will launch this quarter, driven by strong demand. However, high production and engineering costs will impact profit margins, and its sales forecast fell short of some Wall Street expectations. Nvidia's products are pivotal to the AI-driven digital transformation across industries, making its performance a bellwether for the AI and technology sectors.

Why This Is Important for Retail Investors

  1. Strong AI Demand and Market Leadership: Nvidia's dominance in AI chips, driven by products like Blackwell and Hopper, positions it at the center of the rapidly growing AI sector, offering retail investors exposure to this transformative industry.

  2. Consistent Revenue Growth: With a 94% revenue increase year-over-year and consistent outperformance of analyst expectations, Nvidia demonstrates strong growth, making it an attractive investment for those seeking companies with solid financial performance.

  3. High Profitability: Despite short-term margin pressures, Nvidia maintains industry-leading gross margins, far surpassing competitors like AMD and Intel, showcasing its ability to generate higher profits.

  4. Long-Term Demand Outlook: Supply constraints for Blackwell chips indicate sustained demand for AI products, suggesting continued growth opportunities for Nvidia over the next several quarters.

  5. Data Center Dominance: Nvidia's data center revenue doubled year-over-year, accounting for the majority of its revenue, highlighting its critical role in powering AI applications for cloud providers like Microsoft and Amazon.

  6. Expansion Beyond Chips: Nvidia’s diversification into networking, software, and AI-powered systems broadens its revenue streams, making it less dependent on individual product cycles and enhancing its investment appeal.

  7. Challenges Highlighting Execution Risks: Supply constraints and rising production costs underscore potential challenges, reminding retail investors of the risks associated with high-growth companies reliant on advanced manufacturing.

  8. AI Industry Growth: Retail investors can capitalize on Nvidia’s position as a leader in the AI industry, which is expected to experience rapid growth as applications like ChatGPT and generative AI become mainstream.

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Important Notice And Disclaimer

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.