Nvidia Reports Earnings Today. What to Expect.

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The excitement for a near- term revenue boost for Nvidia from the latest wave of artificial intelligence services may prove too optimistic.

Investors will get a look at what it means for Nvidia when the maker of graphics processors reports it earnings after the market close Wednesday.

The Wall Street consensus estimate for

Nvidia

(ticker:

NVDA

) is for the company to report January quarter revenue of $6.02 billion with adjusted earnings per share of 81 cents. Analysts’ revenue estimate for the current quarter ending in April is $6.31 billion.

Nvidia is a leading maker of chips used for videogames, artificial intelligence, and cloud computing applications inside PC and server hardware.

A wave of interest in new AI products has been sparked by OpenAI’s release of ChatGPT late last year. Earlier this month, Alphabet ‘s (GOOGL) Google and

Microsoft

(MSFT) unveiled AI-powered conversational chat bot companions for their search engines. But since the release, users of Microsoft’s Bing A.I. chatbot have also noticed its propensity to give out inaccurate answers and respond with a strange personality.

The promise of new incremental AI revenue for Nvidia may take time. On Tuesday, Wedbush analyst Matt Bryson reaffirmed his Neutral rating on the chip maker’s stock and his $175 price target for the shares.

“We are concerned that while NVDA’s AI potential remains substantial, that expectations may again assume too much, too soon, particularly in light of broader data center spending headwinds,” he wrote. “We remain on the sidelines [on Nvidia stock].”

The analyst also said the chip maker’s gaming card business could be negatively impacted by the softer PC market and weak demand in China.  

The outlook for PC sales has been deteriorating over the last few quarters. According to research firm IDC, worldwide shipments of PCs fell 28% in the December quarter from a year earlier, after a 15% year-over-year decline in the September quarter. IDC cited a continued unwinding of the pandemic-era boom.

In early trading Tuesday, Nvidia shares were down 2% to $209.72. The stock has fallen about 11% over the past 12 months.

Write to Tae Kim at [email protected]