Traders are eagerly ready for Nvidia’s (NVDA) This fall earnings, scheduled for February 25. The final earnings report was an absolute smasher, but the inventory market reacted negatively.
The inventory closed at $186.52 on the day of earnings and closed at $180.64 on the following day. I coated analysts’ reactions to these earnings in my article “Goldman Sachs, JPMorgan and BofA drop verdicts on Nvidia earnings.”
The scenario feels quite a bit totally different this time. Final earnings have been after Nvidia began its downward development after hitting its peak closing value of $207.04 on October 29, in response to Yahoo Finance.
This time, it’s approaching earnings after recovering from a pointy drop, closing at $171.88 on February 5.
It seems just like the AI bubble fears have taken their toll and are subsiding, and the hope is that, other than an earnings smasher, incoming Blackwell-trained fashions will reignite the excessive expectations for future AI fashions. Additionally, the approaching Vera Rubin launch helps.
Nvidia’s outlook for This fall 2026 from Q3 earnings report:
- Income is anticipated to be $65.0 billion, plus or minus 2%, as indicated within the Q3 earnings report.
- GAAP gross margins are anticipated to be 74.8% plus or minus 0.5%.
- GAAP working bills are anticipated to be roughly $6.7 billion.
Morgan Stanley believes that This fall consensus estimate for income of $72 billion feels protected.
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Morgan Stanley expects Nvidia to commerce up on good outcomes
Morgan Stanley analyst Joseph Moore and his staff count on robust This fall outcomes from Nvidia, and have very excessive confidence that the corporate will carry out nicely for the complete yr.
Analysts, who mentioned the final quarter was very strong, with $3 billion of upside and $10 billion of sequential income progress, have been dissatisfied by the inventory market response.
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They famous that whereas it’s apparent that intensifying shortages of DRAM, NAND, HDD, optical, CPU, and energy could possibly be bottlenecks that would enhance visibility for GPUs, they aren’t seeing that, as demand for all types of AI compute, together with trailing-edge, stays robust.
Moore expects the ramp of Vera Rubin to occur roughly on time, however he sees potential for a steeper ramp in Rubin provide than his preliminary expectations, as forecasts have shifted from Blackwell to Rubin within the second half of the yr extra quickly than anticipated.
He famous that for the final quarter, the corporate reported revenues nearly $3 billion above steerage, and guided for $8 billion of sequential progress. It due to this fact doesn’t really feel like there was a deceleration.
This is the reason he believes there shall be $2 billion or extra of upside to the $64 billion steerage, including {that a} consensus income estimate of $72 billion feels protected.
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In a analysis notice shared with me, Moore reiterated an chubby (purchase) ranking for Nvidia inventory and the goal value of $250, based mostly on 26 a number of his market-weight EPS estimate for calendar yr 2027 of $9.57.
He mentioned the value is a reduction in comparison with a large-cap AI peer, Broadcom (AVGO), including that he believes NVIDIA ought to commerce at a premium, given its greater chance of upward revisions within the close to time period.
Morgan Stanley analysts famous draw back dangers for Nvidia:
- AI finish markets don’t materialize as anticipated, and prospects sharply scale back GPU purchases.
- AMD reemerges as a viable GPU competitor.
- Cloud prospects outdoors of Google are in a position to develop aggressive customized {hardware}.
What Financial institution of America thinks about Nvidia inventory
Financial institution of America analyst Vivek Arya and his staff just lately raised their gross sales estimates for Nvidia in addition to EPS estimates.
The agency additionally tweaked its estimates for the overall addressable marketplace for AI information facilities. I coated that analysis notice from February 18 intimately in my article “Bank of America resets Nvidia stock forecast.”
Arya charges Nvidia with a purchase ranking and the goal value of $275, based mostly on 28 a number of his estimate for price-to-earnings ratio excluding money for calendar yr 2027, which is inside Nvidia’s historic ahead yr price-to-earnings vary of 25 to 56.
Analysts famous draw back danger components for Nvidia:
- Weak point in consumer-driven gaming market
- Competitors with main public corporations
- Bigger-than-expected influence from restrictions on compute shipments to China
- Lumpy and unpredictable gross sales in new enterprise, information heart, and autos markets
- Potential for decelerating capital returns
- Enhanced authorities scrutiny of Nvidia’s dominant market place in AI chips
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