Expected triple growth in revenue! Does NVIDIA still need to "exceed expectations"?

After the U.S. stock market closed on February 21, NVIDIA is set to announce its 2024 fiscal year Q4 performance under great anticipation. With the continuous high demand for NVIDIA's AI chips, its Q4 revenue is expected to more than triple.

However, even with such strong growth, some investors may still be disappointed as they have become accustomed to NVIDIA consistently outperforming analysts' expectations. Concerns about whether NVIDIA's financial report can once again exceed expectations have intensified, causing NVIDIA's stock price to drop by over 4% on Tuesday.

If NVIDIA once again warns in its financial report that the U.S. chip ban is harming its business and long-term prospects, and if it cannot resolve the supply shortage issue with its chip foundry Taiwan Semiconductor, the upward trend of NVIDIA's stock price may slow down.

Since last year, Taiwan Semiconductor, responsible for manufacturing and packaging NVIDIA chips, has been facing tight capacity in advanced packaging. Although Taiwan Semiconductor plans to double its CoWoS packaging capacity, it has also warned that the bottleneck may not be resolved until the end of 2024.

Quoting Inge Heydorn, a partner at investment firm G.P. Bullhound, the media reported, "The reason NVIDIA cannot exceed expectations further is due to insufficient capacity, which is hindering their performance, otherwise they could have done better."

Furthermore, NVIDIA had previously stated that it expected a significant decline in sales in China in the fourth quarter of the company last year. In NVIDIA's revenue in the third quarter of last year, China contributed over one-fifth.

However, the strong demand for NVIDIA chips brought about by the global AI upgrade may overshadow all concerns.

On February 18, Morgan Stanley stock analyst Joseph Moore and team released a report stating that NVIDIA's Q4 financial report is likely to exceed market expectations once again. Benefiting from the introduction of the next-generation GPU chip B100 and a clear business layout, revenue guidance remains optimistic:

We believe that NVIDIA's 2024 fiscal year Q4 revenue and 2025 fiscal year Q1 revenue will exceed expectations by $1 billion, reaching $21.5 billion and $23 billion.

Despite the increasingly fierce competition in the AI inference market, NVIDIA is expected to continue expanding revenue, with the most crucial data center business revenue projected to reach $88 billion in 2024, higher than the previous estimate of $80 billion and the 2023 revenue of $46.7 billion.From the statistical data, NVIDIA has shown outstanding revenue and earnings per share in 7 out of the past 8 earnings reports. In the first three quarters of 2023, NVIDIA's quarterly revenue has exceeded analysts' expectations by 10% to 20%. Additionally, companies like Arm, AMD, and others in the artificial intelligence ecosystem have indicated that there is no sign of a slowdown in chip demand.