Nvidia trades lower are blasting estimates as China risks loom Nvidia trades lower are blasting estimates as China risks loom Nvidia trades lower are blasting estimates as China risks loom

Nvidia trades lower are blasting estimates as China risks loom

Equities 4 minutes to read
Peter Garnry

Head of Saxo Strats

Summary:  Nvidia FY24 Q3 earnings results blasted estimates as demand for its AI chips remains very strong. However, shares are indicated down 1% in US pre-market as Nvidia's comments about US export controls severely impacting its China business indicating that growth could slow down faster than expected in the short term. Nvidia's results also show that quarterly revenue is slowing down fast now getting closer to what will become the new underlying structural demand. Long-term trends in the technology sector are still in place and will underpin a strong outlook for Nvidia's business for years to come.

Key takeaways from Nvidia’s earnings release

Yesterday’s Nvidia earnings results were the most anticipated event in equity markets as Nvidia and the generative AI growth story have been the key drivers behind the equity market rally. As we previewed in our equity note Earnings Preview: Is the ‘Intel moment’ coming for Nvidia? there are two risk building for Nvidia’s business; 1) Microsoft is rolling out its own bespoke AI chip in order to lower dependence on Nvidia and cut costs, 2) Tencent comments suggest that Chinese technology companies have significantly front-loaded orders to have enough inventory of AI chips in case the US government restricts exports in the future.

Below are the key takeaways from Nvidia’s earnings results

  1. Nvidia delivered FY24 Q3 (ending 29 October) revenue of $18.1bn translating into 206% y/y growth compared to analyst estimates of 171% y/y revenue growth. In other words, a significant beat. EBITDA was $11bn vs est. $10bn. FY24 Q4 revenue guidance was $20bn +/- 2% compared to analyst estimates of $17.9bn. The revenue guidance shows that while growth is still high the growth rate is coming down fast to whatever the stable growth rate might be after the initial demand wave. Nvidia is a bit more daring this time extending its soft revenue guidance to say that it believes data center segment can grow through 2025.

  2. How can Nvidia shares trade 1% lower in US pre-market when earnings results were so strong. One explanation is that the market had expectations that were even higher than sell-side analyst. Another explanation, and likely the culprit, is the warnings on its China business. US export restrictions have severely impacted its China business (the foresight of Chinese technology companies resulting in the hoarding effect by Tencent) and Nvidia says that it has low visibility on the hit to its Chinese business other than revenue will come down sharply.

  3. Nvidia remains the purest exposure an investor can get to the generative AI push and many of the underlying trends in technology will require advanced AI chips that Nvidia provides. It might be that there will be a slump in Nvidia’s business on the other side of the initial wave of AI enthusiasm but longer term Nvidia is well positioned for long-term growth. Another positive for Nvidia is that the business is getting more revenue streams making the company more diversified compared to the past of only selling GPUs for the personal gaming market.
Nvidia share price | Source: Saxo
Nvidia quarterly revenue per segment | Source: Nvidia


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.