Will Nvidia (NVDA) Beat Earnings? Oppenheimer’s Five-Star Analyst Weighs In

Oppenheimer analyst Rick Schafer anticipates Nvidia will surpass Q1 earnings estimates but projects a roughly in-line outlook for the next quarter, citing potential headwinds from lost H20 chip sales in China due to trade restrictions. Despite this, GB200 rack-scale system production is improving, with Blackwell 200/300 NVL72 system shipments on track to meet or exceed 40,000 units this year, and the GB300 (Ultra) system launch expected in Q3. Schafer maintains an Outperform rating and a $175 price target, emphasizing Nvidia's advantageous position in the AI landscape due to its hardware, software, and rack-level system design.

Analysis

Nvidia is scheduled to report its first-quarter earnings on May 28, with investment firm Oppenheimer, through analyst Rick Schafer, anticipating the company will surpass current-quarter estimates. However, Schafer projects a more cautious, "roughly in-line" outlook for the subsequent quarter, partly influenced by the recent cessation of H20 chip sales in China due to trade restrictions. Despite this caution, Nvidia's production of its top-tier GB200 rack-scale systems is reportedly improving after initial challenges, with shipments of Blackwell 200/300 NVL72 systems on track to meet or exceed 40,000 units this year, and the newer GB300 (Ultra) system expected for a smooth launch in the third quarter. While approximately half of Nvidia's revenue is currently derived from its five largest cloud customers, the company is actively pursuing customer diversification. Consequently, Schafer maintains an "Outperform" rating and a $175 price target on NVDA, emphasizing Nvidia's advantageous position to capitalize on the artificial intelligence boom, supported by its comprehensive hardware and software offerings and unique rack-level system design. The broader Wall Street consensus reflects a "Strong Buy" rating, based on 34 Buys, five Holds, and one Sell assigned in the past three months, with an average price target of $164.51 implying a 23.5% upside potential. Analysts, on average, expect Nvidia to report first-quarter earnings of $0.88 per share on $43.3 billion in revenue.

Key Decisions for Investors

• Investors should closely scrutinize Nvidia's upcoming second-quarter guidance for specific details on the financial impact of Chinese H20 chip sales restrictions and the initial demand trajectory for the new Blackwell GPU architecture, as these will be pivotal for near-term stock performance.
• Considering the strong analyst consensus, Oppenheimer's maintained 'Outperform' rating with a $175 price target, and Nvidia's central role in the AI secular growth narrative, existing shareholders may consider holding their positions, while potential investors could view any volatility arising from cautious guidance as a strategic entry point for long-term exposure.
• Key indicators for sustained long-term growth include the successful execution and scaled rollout of the GB200/300 Blackwell platform, alongside demonstrable progress in diversifying revenue streams beyond the top five cloud service providers.