Nvidia Earnings Outlook Remains Strong Amid Market Challenges
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy NVDA?
Source: CNBC
- High Market Expectations: Nvidia is set to report its earnings after Wednesday's close amid market volatility, with analysts expecting adjusted earnings of $1.53 per share and revenue of $66.2 billion, driven by strong AI compute demand and capital expenditures.
- Optimistic Analyst Ratings: Among 66 analysts, 23 maintain a strong buy rating and 38 a buy rating, with JPMorgan's year-end price target of $250 suggesting a 29.6% upside, reflecting confidence in Nvidia's future performance.
- Strong Product Demand: Analysts from Morgan Stanley and TD Cowen highlight accelerating demand for Vera Rubin, with expectations that Nvidia may exceed management's previous guidance of $500 billion in orders by the end of 2026, further boosting company performance.
- Innovation-Driven Growth: CEO Jensen Huang will present at the upcoming TMT conference and GTC developer event, where he is expected to discuss the progress of Vera Rubin, potentially unlocking new growth opportunities and solidifying Nvidia's leadership in the AI sector.
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Analyst Views on NVDA
Wall Street analysts forecast NVDA stock price to rise
41 Analyst Rating
39 Buy
1 Hold
1 Sell
Strong Buy
Current: 184.890
Low
200.00
Averages
264.97
High
352.00
Current: 184.890
Low
200.00
Averages
264.97
High
352.00
About NVDA
NVIDIA Corporation is a full-stack computing infrastructure company. The Company is engaged in accelerated computing to help solve the challenging computational problems. The Company’s segments include Compute & Networking and Graphics. The Compute & Networking segment includes its Data Center accelerated computing platforms and artificial intelligence (AI) solutions and software; networking; automotive platforms and autonomous and electric vehicle solutions; Jetson for robotics and other embedded platforms, and DGX Cloud computing services. The Graphics segment includes GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems, and Omniverse Enterprise software for building and operating industrial AI and digital twin applications.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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Future Projections: Analysts project continued strong performance for NVIDIA, forecasting $78 billion in revenue for Q1 FY 2027, reflecting a 14.7% sequential increase and a 77% year-over-year growth, excluding China.
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- Data Center Revenue Surge: Data center revenue reached $62.13 billion, surpassing expectations of $60.36 billion, reflecting a surge in enterprise demand for AI computing, further solidifying Nvidia's leadership in the AI sector.
- Optimistic Outlook: The company anticipates revenue of $78 billion for the upcoming fiscal first quarter, excluding any revenue from China, showcasing confidence in global markets while also indicating a cautious stance towards the Chinese market.
- Dividend Announcement: Nvidia declared a quarterly dividend of $0.01 per share to be paid on April 1, enhancing investor confidence and demonstrating the company's ability to return value to shareholders supported by strong cash flow.
See More
Analysts Claim Nvidia is Massively Undervalued
- Market Underestimation: Dan Ives from Wedbush Securities pointed out that Wall Street analysts have severely underestimated Nvidia's valuation, particularly ahead of the upcoming fourth-quarter earnings report, indicating a neglect of the company's potential.
- Surge in AI Demand: Ives emphasized that with the skyrocketing demand for artificial intelligence, Nvidia's chips play a crucial role in driving the AI revolution, making its future earnings pivotal.
- Performance Expectations: Ives anticipates a 'gold medal performance' from Nvidia, reflecting not only his confidence in the company's strong earnings but also potentially influencing investor perceptions of its stock.
- Stock Price Reaction: At the time of writing, Nvidia's shares were trading 2% higher, indicating a positive market response to the optimistic expectations surrounding the upcoming earnings report and analyst sentiments.
See More
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- Acquisition Withdrawal: Netflix has officially exited the competition to acquire Warner Bros., with its initial offer accepted last December, but Paramount Skydance's winning bid of $111 billion led to a 9% stock increase for Netflix, indicating investor approval of this decision.
- Lack of Strategic Rationale: The strategic justification for acquiring Warner Bros. was always questionable, as Netflix's dominance in streaming made Warner's diverse business model seem unnecessary, particularly given the uncertainty surrounding Warner's theatrical operations that conflict with Netflix's preferences.
- M&A Risks in Media: The history of failed media mergers suggests that Netflix's withdrawal avoided potential high acquisition costs and financial strain, especially as Paramount is overpaying for WBD, which was trading below $13 prior to the sale discussions.
- Improved Competitive Landscape: With the merger of Paramount and WBD, Netflix faces fewer competitors for content, potentially providing greater flexibility and opportunities for market expansion, particularly given WBD's significant debt burden.
See More
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- Strong Earnings Report: Amazon's Q4 net sales rose 14% year-over-year to $213.4 billion, showcasing robust performance in both e-commerce and cloud computing, although investor concerns about future spending loom large.
- Cloud Computing Growth: AWS revenue increased by 24% year-over-year to $35.6 billion in Q4, with operating income of $12.5 billion accounting for 50% of Amazon's total operating income, indicating sustained momentum in its cloud business.
- Capital Expenditure Plans: Amazon anticipates investing approximately $200 billion in capital expenditures by 2026, primarily for AI and other tech initiatives, which may exert pressure on the company's cash flow and long-term growth prospects.
- Declining Cash Flow: Amazon's free cash flow fell from $38.2 billion a year ago to $11.2 billion, largely due to a $50.7 billion increase in capital expenditures, reflecting the company's significant investment in expanding its technological infrastructure.
See More
Amazon's Cloud Revenue Growth Accelerates
- Cloud Revenue Growth: Amazon's cloud computing segment saw a 24% year-over-year revenue increase in Q4, reaching $35.6 billion, demonstrating strong performance in the cloud market despite investor concerns over projected $200 billion capital expenditures.
- Strong Advertising Performance: Advertising services revenue hit $21.3 billion in Q4, up 23% year-over-year, providing Amazon with a high-margin revenue stream and further validating its successful diversification strategy.
- Capital Expenditure Outlook: Management anticipates approximately $200 billion in capital expenditures by 2026, which may pressure earnings growth in the short term but reflects confidence in long-term investments in AI and other technology sectors.
- Decline in Free Cash Flow: Amazon's free cash flow fell to $11.2 billion over the past 12 months from $38.2 billion a year earlier, primarily due to a $50.7 billion increase in capital expenditures, prompting investors to monitor the potential impact on the company's long-term growth prospects.
See More
