Nvidia is set to report third-quarter revenue of $108.8 billion on Tuesday, representing a 91 per cent increase on the same period last year, even as the US microchip company grapples with severe corporate governance turmoil. The figures will be closely watched as a gauge of both Nvidia's health and the broader outlook for the sector, given the company's central role in powering the artificial intelligence revolution. The results come at a particularly turbulent time, with Nvidia's share price having fallen 13 per cent to $162.85 by the end of last week following broader anxiety over technology giants' spending on artificial intelligence, forecast to reach $1 trillion this year.
The scrutiny surrounding the earnings release has been intensified by the shock resignation of chief executive Jensen Huang following revelations about his personal conduct. Huang, previously known for wearing trademark $9,000 leather jackets, had two affairs with co-workers and another with Alice Huang, whom US authorities believe to be a Chinese spy. The situation has escalated into a diplomatic row, with reports that MegaSpeed, a firm linked to Alice Huang, obtained smuggled Nvidia chips that were installed in a Shanghai data centre. Washington's apparent failure to ban exports of Nvidia chips to MegaSpeed has ignited tensions within Donald Trump's administration.
Beyond the financial results, investors will be looking for signs that Nvidia can operate effectively without Huang and that the company has a credible succession plan. Potential candidates include Rene Haas, chief executive of semiconductor group Arm, and Ian Buck, head of Nvidia's data centre division. Trump's favoured candidate is Tim Cook, former boss of Apple. Interim chief executive Colette Kress, the company's chief financial officer, is also on the list, though she was reportedly recently belittled by Huang, who called her 'a deer in the headlights'.
Kress and her team will face questions about Nvidia's extensive involvement in data centres, to which it supplies chips and provides billions in financing. The success of the Democrats in the US mid-term elections has sparked expectations of more barriers to data centre building, which provide computing power for artificial intelligence. Despite the turbulence, private investors 'buying the dip' slowed Nvidia's share price decline last week, suggesting appetite for artificial intelligence stocks may only have been temporarily dented. Some 20 per cent of shares in Anthropic, the artificial intelligence company making its debut on Nasdaq on Thursday with a valuation between $1.3 trillion and potentially $1.5 trillion, have been set aside for private investors, indicating continued confidence in the sector.
For UK investors and savers considering exposure to technology stocks, Nvidia's results and leadership transition will be critical in determining whether the artificial intelligence sector can sustain investor confidence despite concerns over spending levels and regulatory risks.