Key Points
- NVIDIA began changing its business two years ago when the artificial intelligence boom took off, thanks to OpenAI’s ChatGPT.
- Since then, the company’s revenue has more than tripled and its profits have grown four times over.
- The assumptions and performance of NVIDIA really dictate what the market is going to start to price into the AI trade, said Melissa Otto, Head of Visible Alpha Research at S&P Global.
Two years ago, the rise of generative artificial intelligence began to change NVIDIA’s business. Since then, the company’s revenue has more than tripled and its profits have quadrupled.
NVIDIA’s second-quarter earnings report, set for Wednesday, marks two years of growth as the company moved from being known for gaming chips to becoming a central force in the tech industry.
Last month, NVIDIA became the first company to reach a $4 trillion market cap, and its value has been rising since late 2022, when OpenAI launched ChatGPT. NVIDIA’s stock price has increased twelvefold this year alone. It’s up 33%, closing Friday at $177.99.
NVIDIA’s growth remains strong for a company of its size, but it has slowed a lot. After five quarters of triple-digit growth in 2023 and 2024, revenue growth dropped to 69% in the first quarter this year. Analysts expect NVIDIA to report a 53% year-over-year increase to $45.9 billion in the second quarter, according to LSEG.
In the first quarter, data center revenue accounted for 88% of NVIDIA’s total sales, underscoring the importance of AI to its business. Last year, 34% of sales came from three unnamed customers. Analysts believe these are big internet and cloud companies like Microsoft, Google, and Amazon, and that they met the assumptions and performance of NVIDIA. Really dictates what the market is going to start to price into the air trade, and the whole air trade has essentially been driving the market this past year, said Melissa Otto, Head of Visible Alpha Research at S&P Global, which aggregates Wall Street research.
NVIDIA now represents about 7.5% of the S&P 500.
Six mega-cap companies other than NVIDIA reported quarterly results in late July, updating Wall Street on their investment plans. In all, they are looking to spend roughly $320 billion on AI technology and data center bailouts. OpenAI, still a private company valued in the hundreds of billions, says it will work with SoftBank and Oracle to spend $500 billion over the next four years on the Stargate project, which President Donald Trump announced in January.
Analysts estimate that about half of AI capital spending goes to NVIDIA. Because the company depends on large cloud providers, it is exposed to economic fluctuations and the unstable AI industry.
OpenAI CEO Sam Altman said last week that he thinks investors as a whole are over-excited about AI and even calls it a bubble. But don’t expect a pullback yet. OpenAI CFO Sarah Friar told CNBC on Wednesday that the company constantly doesn’t have enough computing power.
As always, Wall Street will be paying close attention to NVIDIA’s guidance and other forward-looking commentary from CEO Jensen Huang. For the fiscal third quarter, analysts are expecting revenue growth of $50 billion to $52.7 billion, according to LSEG. If NVIDIA guides higher and tops estimates for the second quarter, analysts say that kind of beat-and-raise could drive AI optimism even higher.
Blackwell Ramp
NVIDIA’s key product is its Blackwell line, which includes both individual graphics processing units and full AI systems that connect 72 GPUs.
Strong sales of Blackwell would confirm NVIDIA’s ongoing technology lead and strong relationships with its main customers, said Ryuta Makino, an analyst at Gamco Investors, which owns shares in the company.
It solidifies that hyperscaler spending is still very strong with the Blackwell ramp, Makino said.
NVIDIA said in May that its new product line had reached $27 billion in sales, accounting for about 70% of data center revenue that’s a steep increase from $11 billion in the prior quarter.
As more black chip file systems are installed, experts expect their superior computing power will enable companies like OpenAI and Anthropic to create even more capable AI models. OpenAI’s GPT-5, which was announced earlier this month, was trained on NVIDIA’s last-generation Hopper chips, not the newer Blackwell processors.
Last year, Nvidia said Blackwell’s growth would be limited by supply, meaning how many chips its partners can make and deliver, not by demand.
Blackwell Ultra is expected to start shipping in the second half of 2025. NVIDIA recently pushed back on an analyst report from Asia that said Rubin, the chip technology expected to account for the bulk of GPU sales in 2027, was experiencing early production problems.
Source: Tech Nvidia faces Wall Street’s high expectations two years into AI boom
