The share price didn't reflect this, but NVIDIA Corp's (NASDAQ:NVDA, ETR:NVD) third-quarter results ticked a lot of the boxes that had been unfilled ahead of the release of the numbers, according to Wedbush Securities, the tech-focused investment bank.
Nvidia's numbers met heightened investor expectations, with the AI chipmaker reporting $35 billion in revenue, fuelled by robust data centre sales and a ramp-up of its H200 chips.
Wedbush, maintaining its optimistic outlook, reiterated an 'outperform' rating, emphasising Nvidia’s continued momentum and management’s clear response to potential investor concerns.
It highlighted Nvidia's Q4 guidance, projecting $37.5 billion in revenue. While slightly below buy-side models, the investment bank noted that Nvidia’s tendency to exceed guidance by $2 billion could imply sales of $39.5 billion or more.
Nvidia also confirmed demand for its Blackwell GPUs is outpacing supply, with rapid customer adoption and a seamless transition from Hopper chips expected by April 2024.
Despite a projected dip in gross margins for Q4 to 73.5%, Nvidia expects a swift recovery as Blackwell ramps, potentially reaching mid-70% margins.
Wedbush called this rebound faster than anticipated, aligning with a $175 price target based on a PE multiple of around 35 times on financial 2027 earnings estimates.
Management also addressed concerns around overheating, assuring investors of operational readiness and successful deployments of GB200 systems. Wedbush viewed these updates as confidence-building, reinforcing Nvidia's dominant position in the AI and data centre markets.
In addition to Nvidia, Wedbush flagged related opportunities for TSMC and AI server providers, pointing to continued robust demand across the semiconductor supply chain.
After hours, the stock flopped 2.5% wiping $90 billion from Nvidia's value. This ostensibly was the result of the outlook statement lacking the oomph of previous updates. But, as Wedbush mentioned, CEO Jensen Huang's mantra tends to be underpromise and over-deliver.