Nvidia Set for Q2 Earnings Surprise as Hyperscaler Spending Hits Record Pace
Nvidia Corp. is set to report its second-quarter earnings after the bell on Wednesday, and tech investor Dan Niles believes Wall Street's growth expectations may be too conservative.
Hyperscaler capital expenditure grew 92% year-over-year and 29% quarter-over-quarter in the three months ended June 30, the fastest pace since ChatGPT launched in late 2022, according to Niles.
The public cloud revenue growth at the three largest cloud vendors accelerated to its fastest pace ever, up 43% year-over-year and 15% quarter-over-quarter, while their aggregate operating margins expanded by 2 percentage points to a record 39%, said Niles.
Nvidia's quarterly revenue growth is projected to slow to 13%, down from more than 20% in each of the last three quarters, according to Wall Street estimates. However, Goldman Sachs analyst James Schneider expects 'a solid quarter with meaningful upside to guidance supported by tight GPU supply/demand trends.'
Niles flagged a political headwind, citing Gallup polling showing that 71% oppose building data centers locally.