Nvidia Corp., one of the dominant players in the semiconductor industry, is expected to deliver substantial revenue growth moving into the first quarter of 2024, driven primarily by soaring demand for its new Blackwell chip.
Wall Street analysts, including C.J. Muse from Cantor Fitzgerald, believe Nvidia is primed to exceed consensus revenue expectations as it begins to capitalize on this demand.
In its recent earnings report, Nvidia noted the increasing demand for the Blackwell chip, which the company expects will generate several billion dollars in revenue by the January quarter.
Early estimates from Wall Street suggest about $4 billion in revenue from Blackwell in Q1 2024, but some analysts believe that the actual number could be even higher.
C.J. Muse and his team at Cantor Fitzgerald have identified Nvidia as having the “best upside to consensus” among the semiconductor companies they track, suggesting that the tech giant has the potential to beat Wall Street’s projections by a significant margin in the coming quarters.
Strong demand for Blackwell sets high expectations
One of the critical factors fueling this optimism is the unprecedented demand for Nvidia’s Blackwell chip. Nvidia’s CEO, Jensen Huang, described this demand as “insane,” underscoring the enthusiasm for the product.
The Blackwell chip, which is designed to meet the needs of artificial intelligence (AI) servers, has seen strong interest from industries investing in AI infrastructure, pushing Nvidia’s expected revenue figures higher.
According to Muse, Nvidia is well-positioned to take advantage of this demand and exceed expectations.
He predicts Nvidia’s January-quarter revenue will reach approximately $37 billion, about $1 billion higher than Wall Street’s consensus estimate.
Furthermore, Muse projects that Nvidia’s revenue for the April quarter will rise to $41 billion, which is also roughly $1 billion above market expectations.
Muse emphasized that Blackwell “should drive upside to numbers and quell fears around any air pocket ahead of what we believe to be the company’s biggest and baddest product cycle we’ve seen.”
Market response and stock performance
Nvidia’s stock has responded positively to the strong demand projections for the Blackwell chip.
On Tuesday, the company’s stock price rose 4%, marking its fifth consecutive day of gains.
Nvidia shares are now just 2% below their all-time high of $135.58, which was reached on June 18.
Jordan Klein, an analyst at Mizuho, echoed the positive sentiment surrounding Nvidia’s stock.
He noted that both long-only and hedge-fund investors are becoming more bullish on Nvidia as the company approaches the start of 2025, particularly given the increasing demand for Blackwell chips.
Klein suggests that this demand may lead to significantly larger revenue beats and stronger outlooks for Nvidia moving into next year.
The optimism surrounding Nvidia is not without precedent. The company has a track record of delivering on ambitious goals and outperforming analyst expectations.
The Blackwell chip, with its ability to handle the demands of AI servers, is seen as a key factor in the company’s growth strategy for 2024.
Nvidia’s future potential
As Nvidia prepares for what analysts believe will be a record-breaking product cycle, industry observers are closely watching how the company handles the high demand for its chips, especially as competition in the semiconductor sector heats up.
Despite some concerns about potential supply constraints, Nvidia’s robust execution and ability to scale its operations have kept investors optimistic.
Cantor Fitzgerald’s C.J. Muse has made it clear that Nvidia is currently his firm’s top pick in the semiconductor space.
With the launch of the Blackwell chip and the broader adoption of AI technologies, Nvidia is well-positioned to capture a significant share of the growing AI infrastructure market.
Looking ahead, analysts are confident that Nvidia’s continued focus on innovation and execution will enable the company to not only meet but surpass its revenue targets, particularly as the Blackwell chip becomes a central driver of its business.
Investors will be keeping a close eye on Nvidia’s performance in the coming quarters as the company navigates a rapidly evolving industry and growing demand for AI-related technologies.
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