VanEck Warns Power Shortage Risks $37B in Nvidia Revenue
U.S. data center power constraints could prevent Nvidia from meeting Q3 expectations despite high demand.
Key points
- VanEck estimates a 1 GW power shortfall risks $37 billion in Nvidia revenue, or 6% of total sales.
- Projected chip power demand of 30 GW through 2027 exceeds the 15-25 GW of new annual data center capacity.
- Wall Street expects Q3 revenue of $104.19 billion and EPS of $2.38, continuing a streak of earnings beats.
VanEck analysts warn that a structural shortage of electricity in the United States poses a direct risk to Nvidia's third-quarter performance. The asset manager argues that infrastructure limitations, rather than softening demand for artificial intelligence chips, could disrupt the company's streak of consecutive earnings beats.
According to a recent note, customers may be unable to procure the necessary power to deploy new hardware. This supply-side bottleneck threatens to cap Nvidia's revenue growth even as Wall Street projects strong results for the quarter ending in November.
Power demand exceeds available grid capacity
VanEck projects that chips from Nvidia, AMD, and Broadcom will collectively require approximately 30 gigawatts of U.S. power through 2027. However, the firm estimates that only 15 to 25 gigawatts of new data center capacity with available power will come online each year, creating a significant structural gap.
Analysts Patrick Bush and Matthew Sigel noted that the risk of missing estimates stems from customers' inability to secure power. They assessed that the failure of miners to lease megawatts is a lower risk compared to the broader energy infrastructure constraints affecting AI data centers.
Each gigawatt shortfall costs billions in sales
The firm quantifies the financial impact of this energy gap by estimating that every 1 gigawatt of unenergized capacity represents approximately $37 billion in lost revenue for Nvidia. This figure equates to roughly 6% of the company's total revenue, highlighting the material threat posed by even a modest gap in power supply.
A potential shortfall of 3 gigawatts could lead to an 18% drop in revenue. This calculation underscores how supply-side limitations challenge the assumption that demand alone drives earnings outcomes for major chipmakers.
Quarterly expectations remain high despite warnings
Wall Street currently expects Nvidia to report third-quarter earnings per share of $2.38, up from $1.30 a year earlier. Revenue projections stand at $104.19 billion, a significant increase from the $57.01 billion reported in the same period last year and above the previous record of $96.22 billion.
Nvidia has beaten analyst revenue estimates for 16 straight quarters. However, the VanEck warning suggests that despite extraordinary AI demand, these optimistic targets may be difficult to achieve if data center power constraints limit chip deployment. The report was sourced from scanx.trade.
