Nvidia’s Earnings Don’t Matter. Future AI Chip Supply Is Everything.

Nearly everyone realizes demand for the company’s artificial intelligence chips will likely outstrip supply for a while. The critical question for investors when Nvidia reports earnings results after Wednesday’s close is not what to make of the near-term situation, but whether or not the company can show progress in alleviating its supply constraints over the longer term.

Nvidia dominates the market for producing chips used for AI projects, making it the primary beneficiary of the generative AI trend. This type of technology is used by chatbots, among them OpenAI’s ChatGPT—which unleashed a wave of excitement after it was released late last year. Many analysts have said the current limitation on Nvidia’s revenue is advanced chip-packaging capacity at semiconductor foundries—and not demand.

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