Nvidia's AI Gold Rush - Will Profits Survive Memory Shortage

• Nvidia expected to report strong revenue growth driven by AI chip demand.
• Hyperscalers' capex forecasts signal continued investment in AI infrastructure, benefiting Nvidia.
• Memory price increases pose a potential threat to Nvidia's gross margins.
• Analysts watching closely to see if Nvidia can pass memory costs onto customers.

Another Day, Another Galactic Credit

This is the Way... Nvidia is poised to release its fiscal fourth-quarter results, and the numbers are looking strong like Beskar steel. Analysts are predicting earnings per share of $1.53 adjusted and revenue of $66.2 billion. That's a growth rate of 68% from last year, making them the biggest beneficiary of this so-called "artificial intelligence boom". It seems every Mando and Jawa on the Outer Rim wants a piece of this AI action. I've seen less hype around a Camtono full of credits.

Hyperscalers Paving the Way

The big players – Alphabet, Amazon, Meta, and Microsoft – have already shown their hand. Their combined capital expenditures could reach a staggering $700 billion this year, all to build out their AI infrastructure. A substantial portion of that fortune ends up with Nvidia, the dominant supplier of AI chips. It’s like the Force is strong with them. The company is selling high-priced GPUs to the biggest tech companies as well as AI startups like OpenAI and Anthropic. It is interesting to observe that the Kremlin is also exploring options for AI development. You can read about their potential fuel aid for Cuba in this article Kremlin Considers Fuel Aid for Cuba Ignoring Trump's Tariff Threat, which shows how global powers are positioning themselves in this technology race.

From Gaming to Galactic Domination

Remember when Nvidia was just about making video games prettier? Now, 90% of their revenue comes from data center hardware. Their data center business is expected to grow by 70%, reaching $60.7 billion. That's enough credits to buy a small moon. It makes me wonder if they'll start taking payment in precious metals from Mandalore next.

The Memory Menace Rises

But there's a Krayt dragon lurking in the shadows: memory prices. There's a global shortage, and Micron is saying demand far outpaces supply. For Nvidia, memory is a crucial ingredient in their AI systems. Investors will be watching their gross margin closely to see if they can pass these costs onto their customers. It's like facing a Mudhorn without your signet. Risky business.

Can the Razor Crest Outrun Inflation?

Nvidia is anticipating a gross margin of around 75% this quarter, up from 73.5% in the third quarter. Analysts seem hopeful, saying management can minimize the impact through "close and early supply chain collaboration." Easier said than done when you're dealing with galactic scale economics. I've had easier times negotiating with Jawas. This is going to be an interesting ride, almost as much as fixing my ship.

The Earnings Call: A New Hope or a Phantom Menace?

Nvidia executives will be on an earnings call today at 5 p.m. ET to update analysts. Will they deliver a message of hope for continued growth, or will investors be facing a phantom menace of shrinking profit margins? Only time will tell. But I'll be watching, with my helmet on and my blaster ready, just in case things get ugly. This is the way.