Nvidia (NVDA +1.68%) investors are facing a big moment: The artificial intelligence (AI) chip giant's third-quarter earnings report is set for next week. Of course, these reports come along every three months, so you may be wondering why this one, in particular, seems to have everyone on the edge of their seats.
In recent weeks, concern has mounted about the possible formation of an AI bubble -- this is after AI stocks have soared quarter after quarter, pushing valuations higher. Now, some worry about whether these levels are sustainable. Other tech companies have offered positive evidence that the AI boom is marching on -- but will dominant chip player Nvidia follow?
Here are three things to watch during Nvidia's Nov. 19 report:
Image source: Getty Images.
1. How Nvidia may stand out
Nvidia chief Jensen Huang recently offered investors clues about demand for the company's latest AI chip architecture, Blackwell, and the update to launch next year, Rubin. He said that total cumulative shipments of Blackwell and Rubin products, as well as networking equipment, so far total about $500 billion over 2025 and 2026.
This supports the idea that demand is going strong for Nvidia's top graphics processing units (GPUs), but it's also important to note that rival Advanced Micro Devices reported record quarterly revenue and just unveiled a strategy to lead the next generation of AI computing.
It will be important to gather clues about how Nvidia will stand out from such rivals as the AI story unfolds, and this is likely linked to the idea of innovation.
NASDAQ: NVDA
Key Data Points
2. Profitability on sales
Nvidia has maintained a gross margin above 70% for most of the recent quarters and aims to continue this. That shows high profitability on sales and is key to the company's ongoing success.
The process of ramping up Blackwell, which launched in the fourth quarter of last year, should help the company streamline processes and support gross margin strength -- unless it encounters headwinds. If we see progress here, it bodes well for Nvidia's future launches -- and this is key since the company aims to launch new products on an annual basis.
3. Comments on China
Nvidia has remained excluded from the Chinese market due to U.S. export restrictions, and in more recent times, China itself has favored the idea of using locally produced chips. Huang has been working to bring Nvidia back to China -- a market opportunity he says may be worth "a couple of 100 billion dollars by the end of the decade," according to CNBC.
I wouldn't expect Huang to announce a solution to this problem during the earnings report, but any clues about his strategy here or potential meetings with the Trump administration on the matter are points to watch.
China represents a huge growth opportunity, one that could supercharge Nvidia's revenue in the years to come.
