NVIDIA (NVDA) is scheduled to announce its Q3 (October) financials today after the market closes, followed by a conference call at 5:00 pm ET.

According to FactSet, the consensus estimates a 481% year-over-year increase in adjusted EPS to $3.37 and a 173% surge in revenues to $16.19 billion. NVIDIA's own revenue forecast is between $15.68 and $16.32 billion.

Remember, NVIDIA disclosed its Q2 (July) results at 4:20 pm ET.

Despite being accustomed to high expectations, a strong Q4 (January) forecast from NVIDIA might receive only modest applause, echoing last quarter's muted response when NVIDIA's projected October quarter revenues exceeded analyst estimates by about 30%, or approximately $3.5 billion.

Despite high anticipations, NVIDIA faces significant downside risks. Yet, the pattern of sharp corrections followed by new highs since June, driven by a mix of fear-of-missing-out and optimism about AI's long-term prospects, suggests that any sell-off post-report could quickly attract buyers, potentially reigniting NVIDIA's bullish trend.

China

Today's focus will also be on recent developments, especially the new U.S. export restrictions on AI chips to China. Reports this month indicated that NVIDIA was developing a custom AI chip lineup for China. Additionally, there were accounts of an AI startup hoarding NVIDIA chips before the ban, hinting at a wider trend in China.

AI

AI demand is expected to remain robust. The recent earnings season showed few signs of waning interest in AI applications, primarily powered by NVIDIA's chips. Taiwan Semi (TSM), NVIDIA's chip supplier, reported strong AI-related demand in Q3, though it wasn't enough to counterbalance the cyclicality of its broader business.

AMD's upbeat Q3 figures were also driven by AI demand, including sales of Ryzen processors in the PC and laptop markets. Intel (INTC) experienced increased interest in its advanced packaging from top AI chip companies during Q3, underscoring a resilient AI market.

Gaming

Attention will also be on NVIDIA's Gaming, Professional Visualization, and Automotive segments during today's report, although the Data Center segment, which comprised most of the July quarter revenue, will likely be the focal point. Positive trends across NVIDIA's diverse segments would be a welcome sign. Lastly, NVIDIA's October quarter report could significantly influence the market, with the potential to either sustain the current upward momentum or trigger a pullback in an already overbought market.

TECHS:

Following a more than 20% rally this month, expectations are elevated for today's NVIDIA October quarter report. NVIDIA reached new all-time highs just yesterday, continuing to exceed high expectations set since its impressive Q1 (April) report.

Equipment suppliers like Lam Research (LRCX), KLA Corp (KLAC), and Applied Materials (AMAT) have seen their stocks reach or approach 52-week highs after their September quarter reports, partly due to stable demand trends, boding well for various aspects of NVIDIA's business.

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