Nvidia Q3 Earnings: Highlighting Key Financial Indicators to Focus On

Nvidia will announce its fiscal third-quarter results after the market closes on Tuesday, November 21. According to Bloomberg consensus estimates, Nvidia's total revenues in the third quarter are expected to increase by 171.1% to US$16.1 billion. Apart from this, we can keep an eye on the following indicators.

The data center business remains the main driver of growth for the AI giant. Q3 data center revenue is expected to reach US$12.8 billion, a year-on-year increase of 234.1%. The data center's share of total revenue is expected to increase to 79.6%.

Non-GAAP net income margin is expected to increase from 24.55% last year to 51.64% this year, which is also an increase from 49.90% in the second quarter. Net Income will likely reach 8.43 billion in the 3rd quarter.

Will operating cash flow hit a new high? Bloomberg consensus estimates showed Q3 operating cash flow is expected to reach $7.42 billion. Free cash flow is expected to reach $7.17 billion, compared with negative levels in the same period last year.

Nvidia just unveiled the new chip H200 last week. The key improvement with the H200 is that it includes 141GB of next-generation “HBM3” memory that will help the chip perform “inference.” Nvidia said the H200 will generate output nearly twice as fast as the H100 when handling LLMs like Llama2.

The move to an annual product-release cycle from an 18-24-month one poses another challenge for rivals -- playing catch up in a bid to encroach on Nvidia's dominant market share. Maintaining compatibility with existing H100 systems, H200 chips are likely to see a faster production and deployment ramp-up, albeit constrained by limited supply.

The H200 is expected to ship in the second quarter of 2024, ensuring that Nvidia can remain competitive and continue to generate new cash flow in the coming years.