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Nvidia jumps after 4-for-1 stock split, earnings on tap Wednesday

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Yahoo Finance’s Dan Howley joins the Yahoo Finance Live panel to discuss the latest with Nvidia.

Video Transcript

AKIKO FUJITA: We are seeing shares of Nvidia pushing higher in the session, up well over 4%, still continuing to gain on the back of its announcement Friday of a 4 for 1 stock split. But can it push even higher with earnings on tap? Let's bring in Yahoo Finance's Dan Howley with a preview of what to expect on Wednesday. Dan.

DAN HOWLEY: Yeah, Akiko, that's right. We're going to see that 4 for 1 stock split. That's going to be voted on during their shareholders meeting, Nvidia shareholders meeting. And then what would happen is, any shareholder of record on June 21 would get those three new shares on July 19. And then they would start trading as that split on July 20. As far as their earnings go, what we're looking at is a potential for a huge quarter for Nvidia, as much as 75% revenue growth for the quarter and as much as 83% on adjusted EPS.

And really, what's pushing this, obviously, is the data center, the idea that so many companies are now going back to the office, or they're fully investing into ways where they can allow for these flexible in office, out of office kind of remote working setups. And they need the cloud for that. So adding the cloud capabilities there, the AI definitely a big part of that machine learning. And then they're seeing huge, huge growth out of crypto and the crypto sales there.

Now Nvidia is taking kind of a stance against too much crypto buying. And the reason being is because of the last time there was this huge buildup in crypto sales that they ended up having this huge overhang of inventory once we saw the price of Bitcoin at that point fall back down to Earth. And what they're trying to do here is hedge their bets and tune down their cards' abilities to be able to mine for certain cryptos. Ethereum is one of the big ones.

And so they're tuning down the cards, making them less capable of mining. So, really, what they're trying to do here is ensure that gamers who want these cards are able to get them. And there's a huge backlog of them, obviously. And then that their miners won't be buying them up as often because if that happens, then they have to go ahead and build out that inventory that may or may not last, depending on how the crypto market goes. So it'll be a really interesting quarter to follow along here.

AKIKO FUJITA: And Dan, Nvidia, like any other chip company, facing these questions about the global shortage that we've been seeing. What do we know or what are we expecting to hear from the company more about the kind of cushion they have on the supply side right now?

DAN HOWLEY: Yeah, I mean, we've already heard that there's issues, obviously, with some of the big consumer chips. I think the question is, the industrial chips that they have, the ones that go into their data centers, and where those are. Now, those are high end chips. Those are the chips that are most affected. They're also the ones that take the longest to make.

So it'll be interesting to see if we can get anything from CEO Jensen Huang about whether or not they're seeing any kinds of big delays there. The consumer side already hit with delays. If you can find an RTX 3080 chip, I'll buy it from you. But it's really, really hard to get a hold of those. So I think that's really one of the big issues, whether or not it will be from the data center side and how badly they'll be backed up there.

AKIKO FUJITA: Yeah, Dan, I mean, it's interesting how this conversation has really evolved. You've got Washington now weighing in on potential need for additional investments in the chip space. But of course, we know that this is not something that's going to be addressed overnight. These buildouts do take time. How do you think Nvidia is positioned when you compare it to some of its competitors in terms of being able to get past the global shortage that we're seeing right now?

DAN HOWLEY: Well, I think, like any other consumer tech company or tech company in general, they get kind of the higher place on the totem pole almost, above the likes of, say, automakers. Because they're buying up the more expensive chips. They require more money to build these chips. So I think that they're going to be the ones that companies kind of provide or cater to a bit more than the automakers. And the issue here is how long it takes to build out these chips. We're talking about months to build some of these more high end chips that they are using. So I think that really kind of speaks to the issue for them, is more of the timeline and the addition of that crunch there.

But I think they would be in a better position than something like an automaker because they're asking for chips that are kind of on the dumber end of things, to put it plainly. The higher end chips, those are the ones that are in higher demand. And that means that the companies that produce them are going to cater to them more. Down the line, whether or not we'll see any more facilities built out across the world-- you know, we talk about, obviously, the US stepping in and wanting to see more infrastructure here-- that isn't an immediate solution. That's something that is years, years, and years down the line. To build the facilities, A, and then to get them up and running and have these chips shipped out, that is not something that's a near-term solution. That's something to hedge against future crunches in the future.

AKIKO FUJITA: Dan Howley always on top of the semiconductor beat for us. I appreciate that. And of course, Nvidia reporting after the bell on Wednesday. We're going to be watching that one very closely.