The Q3 earnings season is slowly grinding to a halt, with just a small chunk of S&P 500 companies yet to reveal their quarterly results.

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But looming large is AI-favorite Nvidia NVDA, whose results are expected after the market’s close on Wednesday. A peer, Advanced Micro Devices AMD, has already delivered its quarterly results, giving us a small read-through of what to expect concerning AI demand and trends within video gaming.

Let’s take a closer look.

AMD Posts Robust Data Center Growth

 

Advanced Micro Devices posted strong growth in its release, with EPS growing 31% on the back of 17% higher sales. Margin expansion unlocked higher profitability, with its reported gross margin of 54% expanding from the 47% mark in the year-ago period.

Notably, Data Center revenue of $3.5 billion reflected a quarterly record and climbed an astonishing 122% from the same period last year. Overall, the Data Center results confirm strong underlying demand for AI, a trend we’ve been very accustomed to over recent periods.

AMD’s data center results have regularly exceeded our consensus expectations in recent quarters, as we can see below.

Image Source: Zacks Investment Research

The valuation picture doesn’t warrant immediate concern, with the current 29.4X forward 12-month earnings multiple comparing favorably to a 42.3X five-year median and 106.9X five-year highs. Further, the current PEG works out to 1.0X, again well beneath historical values and comparing nicely to the Zacks Computer and Technology sector average.

Image Source: Zacks Investment Research

The stock didn’t see a great post-earnings reaction despite the favorable Data Center results, with analysts also downwardly revising their earnings expectations following the release. Weaker-than-expected sales forecasts have been a driver behind the negative share sentiment over recent months, also explaining the downward estimate revisions.

Image Source: Zacks Investment Research

Nvidia Guidance Remains Key

 

Nvidia’s Data Center results have been nothing short of remarkable, consistently blowing away our consensus expectations in recent quarters. As shown below, the beats have been quite sizable, with the most recent totaling a sizable $1.4 billion amid another period of scorching-hot demand.

Image Source: Zacks Investment Research

Investors can likely expect another robust showing within its Data Center, with our $28.9 billion consensus estimate suggesting nearly 100% growth year-over-year. The read-through AMD gave us concerning AI demand also bodes well for NVDA here.