02:58 PM EDT, 08/12/2024 (MT Newswires) -- Nvidia ( NVDA ) is on track to report stronger-than-expected fiscal second-quarter results later this month amid strength in its data center business, UBS said in a note emailed Monday.

The brokerage forecasts data center revenue as high as $26.3 billion for the July quarter, well above the consensus view of $25 billion. That would mark a quarter-over-quarter improvement of 17%. Shares of Nvidia ( NVDA ) were up 4.7% in afternoon trade.

The indicators UBS relied on for the data center business "skewed bullish," analyst Timothy Arcuri said. Super Micro Computer (SMCI) posted strong results on the back of demand for Nvidia's ( NVDA ) Hopper graphics processing unit while Taiwan Semiconductor (TSM) reported robust quarter-to-quarter growth in high-performance computing, Arcuri wrote.

Other data points include gains in King Yuan Electronics' data processing segment, and robust artificial intelligence server results from Quanta, the UBS report showed.

While Taiwan data processing export numbers point to second-quarter data center revenue below $25 billion, UBS said this indicator has often had high variability in regards to Nvidia's ( NVDA ) results. The Taiwan data also does not include the ramping of Nvidia's ( NVDA ) H20 chips in China and misses other large pieces of Nvidia ( NVDA ) revenue, such as networking, Arcuri said.

UBS is modeling for overall Nvidia ( NVDA ) revenue of $29.93 billion and adjusted earnings per share of $0.68, both above the Wall Street views of $28.6 billion and $0.64, respectively. Nvidia ( NVDA ) is scheduled to report earnings for the period on Aug. 28.

Gaming revenue is forecast to rise 3% quarter over quarter to $2.7 billion, in line with the Street's view but well below the five-year seasonal median of 11% sequential growth, according to Arcuri.

A question mark remaining over guidance is the upcoming launch of Nvidia's ( NVDA ) generative AI GPU platform Blackwell. Management told analysts on the company's first-quarter earnings call that Blackwell would contribute significantly to revenue in 2024, according to the UBS report. However, shipments likely won't begin until the middle of December, Arcuri said.

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