All eyes are on Nvidia‘s (NASDAQ: NVDA) upcoming earnings. On Nov. 20, the investing world will get a chance to hear directly from the executive team at the heart of the artificial intelligence (AI) boom. There are some critical questions I hope will be answered, like how recent events at Supermicro will affect the company’s ability to ship its newest Blackwell chips on time and keep up with demand.
Speaking of Nvidia, CEO Jensen Huang described that demand as “insane.” The third-quarter numbers should show if that demand truly is insane. The sky-high expectations Wall Street has placed on the company mean that the degree of insanity matters. “Strong” won’t cut it at this point.
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As observers wait for Nov. 20, let’s take a look at where Nvidia might be a year from now.
Wall Street’s expectations are sky-high for Nvidia. To be sure, Huang’s public statements tend to fuel this fire, but the fact remains that the company’s stock price has continued to have success baked into it, trading at nearly 52 times forward earnings. Here’s a chart showing that in relation to some of the big boys of tech.
Nvidia needs to continue to grow at a hefty pace or its stock price may start to level off. To do this, the company must execute at an extremely high level — something it has shown it can do time and again. The biggest upcoming test is the rollout of Blackwell, the newest iteration of its flagship AI chip.
There were some fabrication issues earlier this summer that Nvidia seems to have ironed out, but now the company faces another challenge: Supermicro, which has been a critical part of Nvidia’s supply chain. Supermicro is facing mounting allegations of misconduct, and now Nvidia is reportedly looking elsewhere for a partner. Nvidia seems to be getting ahead of this, but it remains to be seen if this has any effect on Blackwell supply.
Moore’s Law — the idea that computer processors get roughly twice as fast every two years — has long been the guiding principle in Silicon Valley. In recent years, however, the law’s longevity has been in question. That’s because chipmakers were reaching the limit on the number of transistors that could fit in a circuit — the driving force behind Moore’s Law.
But that may be an outdated paradigm. At least Huang believes it is. Nvidia has introduced the idea of “accelerated computing” in which advances in speed and efficiency come from a whole host of factors — networking, algorithms, software, and data center design — rather than the single limiting factor of the number of transistors in a circuit. He recently posited that this may be the age of “Hyper Moore’s Law” where speed “doubles or triples every year.”
