Goldman Sachs: NVIDIA's financial report is worth looking forward to and will shut up AI critics
Goldman Sachs reiterated its "buy" rating on NVIDIA and predicted that revenue from its next-generation Blackwell GPU chip will grow. NVIDIA plans to provide customer return on investment metrics at the next earnings conference call to instill confidence in investors. Despite spending billions of dollars on AI chips, NVIDIA's profits and revenue for customers are minimal, causing growing concerns in the market. Goldman Sachs stated that investors may begin to doubt the economic situation
According to the information obtained by Zhitong Finance APP, after meeting with Colette Kress, Chief Financial Officer of NVIDIA (NVDA.US), Goldman Sachs reiterated its "buy" rating on the company and gave a target price of $135.
Goldman Sachs stated that NVIDIA plans to emphasize the profits its end users are gaining from using its AI-supported GPU chips more and more.
The market is increasingly concerned that despite spending billions of dollars on NVIDIA's AI chips, the profits and revenue it brings to NVIDIA's customers are minimal.
Earlier this week, Bank of America stated in a report, "End-user companies and their investors will soon be looking for revenue to prove that the $500 billion spent is justified," "No one denies the computing power. But after the recent frenzy surrounding the latest chips, investors may begin to question the recent economic conditions."
Goldman Sachs stated: "To help investors understand the return on investment of customers, Kress pointed out that similar to the way they shared Meta data in the last earnings call, they plan to provide customer return on investment indicators at the next earnings call to instill confidence in investors."
In the last earnings call, NVIDIA stated that API suppliers hosting the Llama 3 model can earn about $7 in revenue from Llama 3 token billing over the next four years for every $1 spent on NVIDIA's HGX H200 server.
The conversation between Goldman Sachs and Kress also included expected revenue growth from NVIDIA's next-generation Blackwell GPU chip.
Goldman Sachs expects revenue from the Blackwell chip to be limited in the third quarter, with greater growth in the fourth quarter (January) and the first quarter (April) thereafter.
Goldman Sachs stated: "Kress also mentioned that in the foreseeable future, investments in data center facilities such as space, power, and cooling - issues that investors often raise because they are related to the ability to build large-scale data centers for customers - are unlikely to disrupt the company's growth trajectory."
Overall, Goldman Sachs expressed confidence that NVIDIA will bring positive earnings surprises and boost the next month's earnings per share revision to positive.
Goldman Sachs stated: "The meeting reinforced our belief in the sustainability of the ongoing new generation AI spending cycle, as well as NVIDIA's ability to maintain its leadership position through continuous rapid innovation in computing, networking, and software."