Nvidia must demonstrate the potential of the Blackwell chip to drive growth in their earnings report.

• Nvidia's GPU chips are widely used in the technology industry for developing and deploying generative AI software.
• On Wednesday, investors will be interested in examining Nvidia's ability to maintain its rapid growth when the company releases its third-quarter earnings.
• What Nvidia says about demand for its upcoming Blackwell chip will be more important than its third-quarter results.

The tech industry's graphics processing unit, or GPU, of choice for making and deploying generative AI software holds 80% of the fast-growing market for artificial intelligence chips, despite rising competition.

Nvidia's third-quarter earnings report on Wednesday will reveal whether the company can maintain its rapid growth, despite the AI market being in its third year.

HSBC analyst Frank Lee wrote in a report this week that Nvidia is venturing into "unexplored territory" as it tries to maintain its dominance on a $3.5 trillion market cap.

"Lee has a buy rating on the stock and expects further upside in 2026 data center momentum, with no signs of a slowdown in the growth trajectory," according to his note.

The demand for Blackwell, the next-generation chip that has just started shipping to end-users such as Google and OpenAI, will be more important than Nvidia's third-quarter results.

On Wednesday, Jensen Huang, Nvidia CEO, is expected to inform investors about the progress of the systems utilizing Blackwell chips and may address rumors of overheating problems in some of these systems.

During the January quarter, Nvidia anticipates Blackwell sales to be in the "several billion" range.

Raymond James analyst Srini Pajjuri wrote in a note last week that his base case is for NVDA to ship approximately 100,000 Blackwell GPUs in 4Q, which he believes is near the low-end of investor expectations. He has a strong buy rating on the stock.

Nvidia's stock has surged nearly 19% since its last earnings report, marking an impressive eightfold increase in share price since the release of ChatGPT in late 2022. This growth has been accompanied by a sharp increase in sales and margin, with the forward price to earnings ratio expanding to just under 50, as per FactSet.

Nvidia's sales growth has slowed down, but it is partly due to the fact that its top line was much larger than before. In the most recent quarter, Nvidia reported 122% growth in sales, which was lower than the 262% year-over-year growth it reported in the April quarter and the 265% growth in the January quarter.

LSEG analysts predict that the company will generate approximately $33.12 billion in revenue, representing an almost 83% increase from the previous year. Additionally, the company is expected to earn 75 cents per share, according to LSEG's consensus estimates.

In the most recent quarter, Nvidia's data center business accounted for almost 88% of sales, shifting the spotlight away from the company's traditional computer games business.

The gaming business of Nvidia is expected to grow by 6% to $3.03 billion, while its automotive business, which produces chips for electric cars, is predicted to increase by 38% to approximately $360 million in sales. The Japanese video game company, Nintendo, has reported major sales declines for the Nintendo Switch, an example of a product that uses Nvidia's chips.

Nvidia's data center business is growing at a rate of nearly doubling annually, and Huang is signaling to investors that the growth will continue.

Nvidia's financial results will be released on Wednesday, and investors should take note of the following information.