Wall Street’s attention is on Nvidia (NASDAQ: NVDA) ahead of this week’s 2024 Q3 earnings report, but the event could be overshadowed by overheating concerns surrounding next-generation Blackwell chips.
Reports indicate that the initially delayed Blackwell chips are overheating in server racks designed for up to 72 chips, raising customers’ concerns about insufficient time to launch new data centers.
The concerns have emerged when the chips are already witnessing increased demand and are viewed as a potential cash cow for the chipmaker, possibly positively influencing the NVDA share price.
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It’s worth noting that some Wall Street analysts had raised NVDA stock price targets solely based on the anticipated role of Blackwell chips in the ongoing artificial intelligence (AI) boom.
Following the emergence of this news, the NVDA stock price is showing weakness. The equity was down over 2% in premarket trading on November 18, falling below the crucial $140 to trade at $138.70. The losses have extended from the November 15 session, where the stock ended the day down 3.26%, valued at $141.98.
What next for NVDA share price amid Blackwell issues
If Nvidia resolves the Blackwell heating concerns by early 2025, the company will likely maintain its AI sector dominance. This success could propel the stock to trade between $200 and $250, driven by strong earnings growth and sustained investor confidence in AI-driven opportunities.
Delays in addressing the overheating problems could also weigh on investor sentiment. However, if Nvidia continues to grow steadily in other areas, the stock could trade within the $150 to $200 range.
On the bearish side, if Nvidia fails to resolve the overheating issues promptly and the Blackwell chips lose their anticipated market impact, the stock could face significant pressure, potentially falling from $100 to $140.
Impact of Nvidia Q3 earnings report
With the NVDA share price showing weakness in reaction to the Blackwell report, investors will anticipate possible guidance during the November 20 earnings call. If the guidance is positive, the stock could continue its 2024 run, where the equity has surged 194% year-to-date.
Notably, analysts anticipate strong growth for the AI company in the quarter ending September 2024. They project that the company will report earnings of $0.75 per share and revenues of $33.09 billion, representing over 80% year-over-year growth.
“We expect a similar story to the last several quarters with a beat and raise in the $2B range [for current quarter revenue guidance],” Jefferies analyst Blayne Curtis said.
It’s worth noting that the Blackwell chip issues might complicate Nvidia’s stock situation before earnings. Historically, Nvidia stock often experiences volatility before earnings and tends to soar afterward.
How the equity will react to the current conditions remains to be seen. In this context, Wall Street analysts have offered mixed targets for Nvidia after the earnings, with the majority maintaining that the $200 target remains within range.
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