Nvidia’s Stock Surge: Insights Ahead of Earnings Report
On Tuesday, Nvidia (NVDA) stock surged over 4%, signaling renewed confidence among investors amid strong expectations for the company’s upcoming earnings report. Wall Street analysts are shedding optimism on Nvidia, with several raising their price targets in light of robust chip demand as the company gears up for its earnings announcement scheduled for Wednesday afternoon.
Analyst Upgrades Highlight Strong Demand
Stifel’s Ruben Roy has upped his price target for Nvidia from $165 to $180, attributing this increase to "a diverse set of data points." He points to the continued significant investments in AI infrastructure by hyperscale cloud providers and heightened demand for Nvidia’s cutting-edge Blackwell AI chips. In fact, Roy projects that as of the end of 2025, Nvidia could be operating in a total addressable market (TAM) exceeding $100 billion, with a longer-term funnel that could approach $1 trillion. This expansive potential underlines Nvidia’s critical role in the tech ecosystem, especially as businesses pivot toward AI-driven solutions.
Truist Securities’ William Stein also raised his price target from $148 to $167, reflecting heightened confidence in Nvidia’s capabilities and market positioning.
Major Contracts Fueling Growth
The recent news of cloud provider Nebius Group’s plan to launch its first GPU cluster in the U.S., utilizing up to 35,000 Nvidia chips, adds further weight to this bullish sentiment. This order represents approximately 4% of the expected shipments of Nvidia’s Hopper AI chips for the October period, according to Bloomberg consensus data. Such contracts not only showcase the growing demand for GPU clusters used in AI training but also highlight Nvidia’s market dominance.
Navigating Concerns Over Blackwell Issues
Despite the upbeat outlook, Nvidia’s stock rose against a backdrop of concerns regarding potential overheating issues reported with its Blackwell AI servers. In August, the company faced reports of design challenges that have delayed the production ramp for these chips until the January quarter. Although Nvidia has not confirmed these overheating issues, stating that "engineering iterations are normal and expected," the market remains in a watchful stance.
Truist’s Stein remarked that while conversations with industry contacts don’t fully corroborate the overheating claims, they do point to supply chain challenges affecting the production ramp-up. Dell Technologies, however, reported that it has successfully shipped its latest AI hardware comprising Nvidia’s newest GB200 NVL72 systems. This indicates that while challenges exist, there remains significant progress in deploying Nvidia’s technology.
Cautious Sentiment from KeyBanc
Not all analysts share in the optimism. KeyBanc has taken a more reserved stance ahead of Nvidia’s earnings, lowering both earnings and revenue expectations for the January quarter. They note that demand for H20 chips in China appears to be stunted as domestic hyperscalers face increasing pressure to adopt local AI solutions. Additionally, concerns were raised regarding potential cannibalization of Nvidia’s Hopper chips by the Blackwell lineup.
KeyBanc has adjusted their fiscal fourth-quarter sales guidance for Nvidia down to $37.7 billion, from $40 billion, while also lowering earnings expectations from $0.88 to $0.83 per share. Nonetheless, they have maintained an Overweight rating on Nvidia stock, with a price target still set at $180.
Conclusion: The Market’s Resilience
Nvidia’s upcoming earnings report is set against a backdrop of both optimism and caution. Overall, analysts project Nvidia’s adjusted earnings per share to rise 85% year-over-year to $0.74, alongside a revenue increase of approximately 84% to $33.2 billion, according to Bloomberg estimates. With around 90% of Wall Street analysts recommending a buy, the sentiment surrounding Nvidia remains predominantly positive, despite navigating some headwinds.
Investors keen on tech stocks should keep close tabs on Nvidia’s performance and potential market movements post-earnings. As always, staying informed is crucial in the ever-evolving landscape that defines the financial world.