Nvidia’s earnings reports tend to be market-moving events, and the company’s report on Wednesday could be particularly significant as Wall Street is gripped by AI anxiety.
A drop in demand for Nvidia products as hyperscalers’ AI spending comes under increased scrutiny could signal a slowdown in the AI boom that investors have bet heavily on in recent years.
AI trading in general is also currently under intense scrutiny as Anthropic’s Claude AI disrupts the industry and reorders the list of winners and losers in stocks.
“NVIDIA remains at the center of the AI story, and we believe hyperscaler capex is the clearest real-time indicator of AI demand,” Lauren Goodwin, chief market strategist at New York Life Investments, said in an email Tuesday. “As long as companies continue to aggressively deploy capital into AI infrastructure, we see no signs of a rollover in this theme. The foundational layer of AI remains supply constrained.”
Wall Street expects the semiconductor giant to post revenue of $65.91 billion, with $60 billion of that coming from its all-important data center business.
As the market heads into Wednesday afternoon’s blockbuster report, analysts say what to watch:
wedbush
Dan Ives, a bullish technology analyst at Wedbush, said he expects Nvidia to easily beat revenue estimates.
But perhaps what investors will be watching most of all is CEO Jensen Huang’s tone and his outlook for future chip demand.
“There is one company that will be fundamental to the AI revolution and that is Nvidia, and as the godfather of AI, Mr. Jensen has the perfect perch and vantage point to discuss enterprise-wide AI demands and future demand for Nvidia’s AI chips,” Ives wrote in a client note on Monday.
morgan stanley
Joe Moore, a Morgan Stanley analyst who covers Nvidia, said he plans to buy the stock ahead of Wednesday’s earnings as industry players remain optimistic about the company.
Moore has a $250 price target for the stock, which suggests an upside of 29%.
In the weeks following the report, Moore noted Jensen Huang’s appearances at Morgan Stanley’s TMT conference and GTC developer event to learn more about the company’s Rubin platform, which he said could be a catalyst for an upside.
Ameriprise
Anthony Sagrimbene, chief market strategist at Ameriprise, said he will be watching for updates on how NVIDIA is successfully ramping up production of its new Rubin models.
“Executing on a next-generation platform like Rubin must give investors confidence that the company is on track with its deployment schedule and lead times are manageable.”
He added that the company needs to prove that it can “continue to successfully manage industrial-scale manufacturing growth, which we haven’t seen very often in history.”
charles schwab
Joe Mazzola, head trading derivatives strategist at Charles Schwab, said he is wary of increased investor scrutiny of the company’s profit margins as production costs rise.
“Although AI spending shows little sign of easing, Nvidia and its fellow semiconductor companies face rising costs for bandwidth memory amid sector shortages, which could impact expected margin growth,” Mazzola said in an email Tuesday.
On the revenue front, he said data centers will be the most important driver to focus on, and guidance should also be above average expectations.
“NVIDIA is under constant pressure to deliver growth that exceeds not just the quarterly consensus, but the average analyst forecast, quarter after quarter.”
reasonable funds
Like Ives, Luke Ravalli, co-portfolio manager at Rational Equity Armor Fund, said the forward guidance will be the most notable. Any negativity can cause problems for stock prices and other AI trading.
“I would have to say they are growing year-on-year, and that number has to be healthy. It doesn’t have to be as healthy as the growth here, but growing at a steady year-to-year clip is going to be important,” Rabari wrote. “If they mention any kind of slowdown, say year-over-year growth is going to be much lower, or pull back on investments in some of their own customers, that would indicate demand for chips is going down.”
