Nvidia Stock Gains. The AI Chip Maker Needs This From Big Tech Earnings.

Nvidia chips are the favored choice for training artificial-intelligence models. (Courtesy NVIDIA)

Key Points

• Nvidia’s stock was rising, with future movement tied to upcoming earnings reports from major technology companies.
• Analysts are monitoring large AI data center constructions as a key factor for revenue forecasts for companies like Nvidia and Oracle.
• Microsoft, Alphabet, and Amazon are estimated to generate $25 billion to $30 billion annually from AI customers in their cloud businesses.

Nvidia was edging up early on Wednesday, with the next catalyst for the stock set to be earnings from the big technology companies next week.

Nvidia shares were up 0.3% at $181.77 in morning trading. The stock fell 0.8% on Tuesday.

Shares have largely moved sideways since August and are set to be driven by earnings reports from Microsoft , Google-parent Alphabet and Amazon.com next week. A substantial rally probably depends on them providing further evidence they can tackle the power and logistical requirements of building huge new AI data centers beyond just flagging they will continue spending on Nvidia’s hardware.

“It will become even more important to monitor the big AI data center builds as an input into the forecasts for everyone from Nvidia to Oracle,” wrote UBS analyst Karl Keirstead in a research note on Tuesday. “To date, we have not detected any material go-live constraint that would cause us to throttle-back our AI revenue estimates for the cloud infra providers.”

Keirstead estimates that Microsoft, Alphabet, and Amazon are currently generating from $25 billion-$30 billion annually from AI customers in their cloud-computing businesses.

“The demand for compute from the model providers is so immense that at least near-term, it almost doesn’t matter that enterprise AI spend remains early-stage and is progressing at a disappointing clip,” Keirstead wrote.

Among other chip makers, Advanced Micro Devices was falling 0.3% and Broadcom was down 0.1%.

Write to Adam Clark at adam.clark@barrons.com