Nvidia's Upcoming Earnings to Set Tone for AI Investment Rush, Wall Street Analysts Say

The start of 2024 sparked a debate among investors regarding the monetization of the AI Revolution, marking a significant shift in the tech landscape akin to the emergence of the Internet in 1995, Wedbush analyst Daniel Ives said.

The key focus was on enterprise spending trends, seen as crucial to validate lofty valuations and pave the growth path for the year and beyond, as per the analyst.

Recent earnings calls by major tech giants like Microsoft Corp MSFT, Alphabet Inc GOOG GOOGL, Meta Platforms Inc META, and Amazon.Com Inc AMZN revealed an uptick in capital expenditure towards AI infrastructure, signaling the onset of AI monetization within the tech sector, Ives stated. 

Microsoft’s Copilot program exceeded expectations, indicating robust demand for AI deployments among its clientele.

Attention now turns to Nvidia Corp NVDA, regarded as the pioneer of AI, as it prepares to announce its earnings and provide guidance, Ives said. 

The tech community awaits Nvidia’s insights with bated breath, anticipating another impressive performance and bullish outlook.

Investors are particularly interested in the pace of data center AI spending, as Nvidia remains the primary choice for GPUs powering generative AI applications. 

Despite concerns over valuations, especially for AI-focused companies like Microsoft, Palantir Technologies Inc PLTR, and MongoDB, Inc MDB, many investors recognize the transformative potential of these tech giants and their role in shaping the future.

Projections suggest a substantial increase in AI spending, with an estimated $1 trillion in incremental expenditure over the next decade. 

Currently, discussions primarily revolve around enterprise-oriented generative AI, with consumer-centric AI initiatives also gaining traction among significant players like Alphabet, Meta, Amazon, and Microsoft.

In summary, Nvidia’s earnings report holds immense significance for both the tech sector and broader markets. 

Analysts closely monitor GPU orders and demand trends from enterprises, viewing Nvidia and Microsoft as primary beneficiaries of the AI Revolution, with further derivatives of AI innovation anticipated to emerge throughout 2024.

Last week, Wedbush analyst Matt Bryson projected fourth-quarter revenue and EPS of $20.01 billion and $4.48 for Nvidia. 

The analyst backed up the projections, citing continued momentum in AI infrastructure spending and high demand for High Bandwidth Memory (HBM). 

Nvidia is expected to be the largest consumer of these components in 2024. He also flagged significant capital raises for AI startups.

Price Actions: NVDA shares closed lower by 4.35% at $694.52 on Tuesday.

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