Earnings are reported after the market close on Wednesday. While some analysts have expressed concerns about how weakness in the tech sector may affect the semiconductor maker, one analyst believes there may be a silver lining.
Demand for data centers has remained resilient and could be a life raft for chip companies like Nvidia (ticker:
) Citi analyst Atif Malik wrote in a research note.
“We hear that the data center remains a relatively strong area of semiconductors as demand related to consumer semiconductors PCs and smartphones continues to decline,” he wrote.
Nvidia’s data division accounts for nearly 50% of sales, so any strength in that division would be good for the company, he said. Malik expects Nvidia’s management to deliver positive comments in its earnings report, along with earnings in line with expectations. He added that the company could turn a profit in the July quarter, driven by strength in data centers.
Wall Street expects Nvidia to report adjusted earnings of $1.30 a share when it reports quarterly results on Wednesday. Analysts estimate revenue could reach $8.12 billion, with $3.6 billion coming from the data center segment, according to FactSet.
(SNAP) on Monday cut its financial guidance for the fiscal second quarter, citing a challenging business environment. The warning sounded alarm bells across the tech industry, sparking an industry-wide sell-off that left few unscathed, including Nvidia. Investors will eagerly await the semiconductor company’s results to see if Snap’s economic challenges are as widespread as the market thinks.
Over the weekend, Nvidia said it was slowing hiring, joining several tech companies that have decided to cut jobs amid rising costs.
Nvidia shares rose 1.6 percent to $164.16 on Wednesday. The stock has fallen 44% this year on concerns about lagging consumer demand and overall industry pessimism.
Write to Sabrina Escobar at [email protected]