Nvidia (NVDA) -) shares nudged higher in early Wednesday trading ahead of the chipmaker's highly-anticipated second quarter earnings slated for after the closing bell as investors look to the market leader for key guidance on AI demand.
Analysts expect Nvidia to post a bottom line of $2.09 per share for the three months ending in July, a four-fold increase from the same period last year and around 5 cents ahead of the chipmaker's blowout spring forecast. Group revenues are expected to rise 67.6% to $11.2 billion, again topping Nvidia's May estimate of around $11 billion.
The larger focus, however, is likely to come from Nvidia's near-term sales guidance, expected in the range of $12.5 billion for the current quarter and $14 billion for the three months ending in December, which is likely to provide the benchmark for global demand in the rapidly-developing market for AI technology, much of it powered by Nvidia-designed chips.
Supply chain issues, however, may cloud Nvidia's outlook as the capacity constraints tied to chip-on-wafer-on-substrate, or CoWoS, a crucial component of AI chipmaking. The high-end packaging technology has been in high demand this year as companies such as Nvidia, Broadcom AVGO, Amazon AMZN and others ramp up production to meet surging end-market interest.
Taiwan Semiconductor, the world's biggest chip contractor, has been struggling to meet that demand surge, forcing Nvidia -- which has already secured around 40% of TSMC's CoWoS capacity for this year -- to source the high end packaging technology elsewhere, including Tempe, Arizona-based Amkor Technology and Taiwan-based United Microelectronics Corp. UMC.
Nvidia shares were marked 1.4% higher in the opening hour of trading to change hands at $463.03 each.
Earlier this year, Nvidia Chief Executive Jensen Huang described AI as having reached an "inflection point" as the world's fastest-developing technology after the group unveiled a new AI supercomputer known as Nvidia DGX.
The platform enables business customers to access AI-related technology through cloud-computing providers such as Microsoft (MSFT) -) and Oracle (ORCL) -), essentially creating a new market for AI-as-a-service to thousands of companies worldwide.
That ability to address the new AI investment explosion, sparked in part by the unveiling of the ChatGPT chatbot earlier this year, could put Nvidia in a leadership position within a market that could be valued at more than $600 billion.
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