Nvidia is set to release its third-quarter financial results on Tuesday, a report keenly anticipated as a barometer for the artificial intelligence chip sector. The figures will offer insight into the health of the company, a key player in the AI revolution, amidst significant leadership challenges and the booming flotation of AI firm Anthropic.
Anthropic, the creator of the AI system Claude, is preparing for its initial public offering on the Nasdaq exchange this Thursday, with shares expected to be priced between $70 and $78. The company's valuation is estimated at $1.3 trillion, with expectations that it could rise to $1.5 trillion due to strong investor demand, which has reportedly seen the offering six times oversubscribed. UK private investors are also showing interest, with platforms like AJ Bell and Hargreaves Lansdown facilitating applications for a portion of shares set aside for them.
The scrutiny on Nvidia intensifies following the recent resignation of its chief executive, Jensen Huang. Huang, previously known for his distinctive leather jackets, is now embroiled in a scandal involving alleged affairs with co-workers and a reported connection to Alice Huang, whom U.S. authorities suspect of being a Chinese spy. MegaSpeed, a company linked to Alice Huang, is alleged to have obtained smuggled Nvidia chips for use in a Shanghai data center, sparking controversy within the Trump administration regarding the alleged failure to ban such exports.
Nvidia is projected to report revenue of $108.8 billion for the three months ending October 25, a 91 percent increase year-over-year. However, the company must also demonstrate its ability to navigate the post-Huang era and assure markets that a successor is being sought. Potential candidates mentioned include Rene Haas, CEO of Arm; Ian Buck, head of Nvidia's data center division; and interim CEO Colette Kress, the chief financial officer. Former Apple CEO Tim Cook has also been suggested as a favored candidate by Donald Trump.
Questions are expected regarding Nvidia's substantial involvement in data centers, not only as a chip supplier but also as a provider of billions in financing, an aspect that is becoming increasingly contentious. The recent success of the Democratic party in U.S. mid-term elections has raised concerns about potential new barriers to building data centers, which are crucial for AI computing power.
Broader anxieties surrounding the massive spending by tech giants on AI, projected to reach $1 trillion this year, contributed to a 13 percent drop in Nvidia's stock price last week, closing at $162.85. Despite this decline, an influx of private investors buying the dip suggests that the appetite for AI stocks may only have experienced a temporary pause.