Nvidia Stock Soars Ahead of Earnings Report
Strong Chip Demand Fuels Optimism
Nvidia’s stock surged over 4% on Tuesday, driven by bullish sentiments from Wall Street analysts who cited robust demand for the company’s chips ahead of its earnings report. The analysts’ optimistic notes came despite recent reports of overheating issues with Nvidia’s Blackwell AI servers.
Analysts Raise Price Targets
Stifel analyst Ruben Roy increased his price target on Nvidia to $180 from $165, citing a diverse range of data points, including continued high spending on AI infrastructure by hyperscalers and demand for Nvidia’s latest Blackwell AI chips. Truist Securities’ William Stein also raised his price outlook to $167 from $148.
Diverse Markets Drive Growth
Roy believes Nvidia is well-positioned in markets that combine to yield an overall total addressable market (TAM) of over $100 billion by 2025, with a longer-term opportunity funnel approaching $1 trillion. The company’s strong presence in AI infrastructure, robotics, and traditional computing sectors is expected to drive growth.
Nebius Group Launches GPU Cluster
Nvidia stock also received a boost from news that Nebius Group, a cloud provider, is launching its first GPU cluster in the US, which will utilize up to 35,000 Nvidia chips. This massive compute power will be used to train and run artificial intelligence software.
Overheating Issues Remain a Concern
However, Nvidia’s stock had fallen earlier due to reports of overheating issues with its Blackwell AI servers. While the company has not confirmed these issues, Truist Securities’ Stein noted that conversations with industry contacts reflect supply chain challenges around the production ramp.
Dell Technologies Ships AI Hardware
Despite reported Blackwell issues, Dell Technologies has already shipped its latest AI hardware product, the PowerEdge system, featuring Nvidia’s GB200 NVL72 systems. Stein remains optimistic, citing emerging demand for Nvidia chips in various sectors.
KeyBanc Takes a Cautious Stance
KeyBanc analysts, however, took a more cautious outlook on Nvidia ahead of earnings, lowering their earnings and revenue outlook for the January quarter. They cited a squeeze on demand in China for Nvidia H20 chips and concerns that the latest Blackwell chips could cannibalize Nvidia’s prior generation Hopper chips.
Analysts Expect Strong Earnings
Despite the mixed sentiments, analysts expect Nvidia’s adjusted quarterly earnings to rise 85% from the year-ago period to $0.74 per share, with revenue increasing roughly 84% to $33.2 billion. About 90% of Wall Street analysts recommend buying the stock.
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