Investing.com - Accelerated computing power and demand from enterprise, government and cloud service providers are both due to drive growth at artificial intelligence-darling Nvidia (NASDAQ:NVDA), according to analysts at Redburn Atlantic.
In a note to clients, the analysts led by Timm Schulze-Melander said these trends underpin their expectations that Nvidia will post a "sustainable" 65% earnings before interest and taxes margin. Compound annual growth in per-share income is also tipped to be at 38% between this year and 2030, they added.
The analysts launched their coverage of Nvidia's stock with a "Buy" rating and a price target of $178.
Nvidia is due to report its latest quarterly results on Nov. 20, with investors on the lookout for any guidance from the chipmaking titan about demand for its AI-enhancing hardware heading into 2025.
Some analysts have come to view the release of the figures as equivalent in importance for markets as the US jobs report or consumer price data. Nvidia, which manufactures semiconductors that are considered to be crucial components in training and deploying AI-powered applications, has become a focal point of runaway enthusiasm around the nascent technology.
Shares in the company have surged by more than 200% so far this year, a sharp rally that has also fueled its outsized impact on US stock markets. Much of the year-to-date gains in the benchmark S&P 500 has been driven by the spike in Nvidia.
Big Tech players like Google-owner Alphabet (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN) are among Nvidia's largest customers, spending heavily on its products to run their own all-important AI innovations. As a result, Nvidia's earnings can serve as a gauge of the state of the AI boom, particularly at a time when investors are beginning to call for more evidence that the steep AI expenditures are leading to tangible returns.
CEO Jensen Huang said in August that demand for Nvidia's current-generation Hopper chips was "strong," although the company's guidance for third-quarter revenues of $32.5 billion -- plus or minus 2% -- was only slightly above Wall Street projections. Analysts noted that, due to Nvidia's recent track record of far outpacing expectations, even a modest beat was enough to disappoint investors.
Meanwhile, Chief Financial Officer Colette Kress laid out a timeline for the production of Nvidia's next-generation Blackwell chips. Kress said output of the processor -- which was delayed earlier this year -- is now tipped to ramp in the fourth quarter and continue into Nvidia's 2026 fiscal period.
"In the fourth quarter, we expect to ship several billion dollars in Blackwell revenue," Kress said.