Bernstein analysts are optimistic about NVIDIA's (NVDA) datacenter revenues heading into Q4, expecting them to show strong growth.
"Datacenter revenues into Q4 look strong," said Bernstein.
After a recent meeting with Nvidia (NASDAQ:NVDA) CFO Colette Kress and Investor Relations lead Stewart Stecker, Bernstein notes that Nvidia clarified its previous statement about a revenue boost for its new Blackwell chip, indicating that it could be "several billion" dollars, rather than the $3 billion figure previously speculated.
Bloomberg’s current consensus forecasts a $3.8 billion increase in Q4 datacenter revenues, and Bernstein sees potential for upside beyond this.
The firm says Nvidia's gross margins are expected to remain solidly in the 70% range.
The slight margin compression seen in the second half of 2024 is attributed to product mix, particularly the ramp-up of Blackwell and the H200 platform, and is not related to yield issues.
According to Bernstein, Nvidia's management reassured investors, with Kress stating, “Guys, relax, margins are fine.”
The firm notes that Nvidia’s Blackwell offerings are highly customizable, allowing customers to tailor configurations to their specific needs.
This flexibility is seen as potentially leading to varied pricing, which is still being finalized. Bernstein says Nvidia remains confident in its position in the inferencing market, with its GPU technology offering superior performance compared to custom ASICs, particularly in total cost of ownership (TCO).
The company is said to believe that AI training infrastructure will continue to expand, and inferencing revenues will grow significantly, especially in areas like recommender engines and search.
Additionally, Bernstein says Nvidia sees promising opportunities in the sovereign AI space as countries and regions develop their own AI infrastructure.
They add that power consumption concerns were downplayed, with Nvidia noting that major customers have been planning their energy needs for several years, easing fears of bottlenecks.