NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) earnings have become among the most hotly anticipated events on the global financial calendar
The number-one supplier of hardware to the artificial intelligence industry has shown the ability to sway the influence the wider technology markets thanks to its dizzying top-line growth and unprecedented, multibillion-dollar earnings beats
"As Nvidia goes, so go most of the semiconductor stocks and AI plays," is how Jay Woods, chief global strategist at Freedom Capital Markets (NASDAQ:FRHC), put it.
He noted that the stock's average post-earnings move is plus 8.5%, making it a critical factor for market volatility.
But can Nvidia carry this burden once again when it publishes its first-quarter earnings report today?
Yes, according to Barclays.
AI chips a sure bet
“All signs point to another revision higher,” said analysts at the bank, noting that Asia checks suggest a nearly 10% upside in graphics processing unit sales in the quarter (increasing to over 20% for the quarter ahead as capacity expands).
The supply chain's expectations align with these projections, anticipating solid revenue gains due to H200 pricing starting in the July quarter.
“We believe the company can capture incremental revenue upside due to pricing on H200, which will start shipping in the July quarter,” said the bank.
H200 is one of Nvidia’s cornerstone products, a GPU highly optimised for generative artificial intelligence applications.
Barclays projects NVIDIA's data center (DC) segment revenue (which encompasses AI chip sales) to be around $23 billion in the first quarter, surpassing Street estimates of $21.1 billion.
These projections include contributions from Mellanox Technologies (MLNX), which Nvidia bought for $6.9 billion in 2019.
“While investor concerns through the quarter have largely centered on a potential air pocket in the middle of the year ahead of the Blackwell launch, we still do not see evidence of this occurring, with the tone from our checks remaining mostly unchanged,” said Barclays.
Blackwell is Nvidia’s next generation of high-end GPUs. There are concerns that customers may be putting off orders until they can get their hands on the next generation of chips.
Barclays is overweight on Nvidia stock with a $1,100 price target against the current $946 share price.
Beating expectations
Nvidia should stick to a trend of trouncing expectations on the back of ongoing healthy demand, said Deutsche Bank analysts.
They noted the post-close update would mark one year since NVIDIA’s market-changing report in May 2023 crushed expectations and signalled a turning point in the chipmaker’s history.
“We expect the company to continue its trend of delivering healthy multi-billion dollar beats (and) raises on still healthy demand for AI compute,” Deutsche analysts said in a note.
Deutsche acknowledged some may be putting off orders before the release of Blackwell.
However, “we still expect aggregate demand trends to remain healthy,” Deutsche added, likely meaning NVIDIA’s near-term guidance will be unaffected.
“Overall, we remain impressed by NVIDIA’s best-in-class technology roadmap and believe AI fervour by its customers is likely to be sustained, yielding yet another strong quarter,” Deutsche said.
However, Deutsche is a bit colder on the prospects of another supersized post-earnings rally.
Highlighting “already well-understood” fundamental strength, Deutsche slapped a hold rating on the stock with an $850 price target, which is substantially lower than the consensus.
Bloomberg statistics have the equivalent of 61 buys, 7 holds and 0 sells on the stock. The average analyst price target is $1018.45, which is slightly less than a 10% upside from current levels.