Nvidia is due to post earnings after the bell. What analysts are saying ahead of the report

Ahead of Nvidia's fiscal first-quarter earnings report, analysts anticipate adjusted EPS of 93 cents on $43.28 billion in revenue, representing significant year-over-year growth. While concerns remain regarding the impact of China restrictions, which have significantly reduced Nvidia's market share there, recent AI-related announcements from major hyperscalers have fueled optimism, with many analysts maintaining positive ratings and price targets suggesting substantial upside; however, some analysts caution about a potentially messy Q2 guide and the stock's valuation after its recent surge.

Analysis

Nvidia is poised to report its fiscal first-quarter results with analysts, polled by LSEG, anticipating adjusted earnings of 93 cents per share on $43.28 billion in revenue, marking substantial year-over-year growth of 52% and 62%, respectively. Despite a bullish overarching sentiment, significant questions persist regarding the company's forward path, primarily concerning the impact of U.S. restrictions on sales to China. Nvidia has previously disclosed an expected $5.5 billion charge related to these restrictions, and CEO Jensen Huang acknowledged a drastic reduction in China market share from 95% to 50%, with Oppenheimer noting it is now below 5% of sales. Nevertheless, Nvidia's stock has surged over 24% in the past month, buoyed by renewed AI enthusiasm following announcements from hyperscalers like Alphabet's Google and Microsoft. The consensus LSEG price target suggests approximately 21% upside, with 56 out of 64 analysts maintaining strong buy or buy ratings. Analyst commentary highlights a divergence: Morgan Stanley ($160 PT), Bank of America ($160 PT), Wolfe Research ($150 PT), Oppenheimer ($175 PT), and Piper Sandler ($150 PT) generally recommend buying or maintaining overweight positions for the long term, citing secular AI demand, improving supply for Blackwell and rack systems, and potential for China sales recovery with compliant products. However, some, like Bank of America's Vivek Arya, caution about a "risk of messy Q2 guide," and Piper Sandler's Harsh Kumar anticipates a potential revenue miss for the April quarter due to macro uncertainty and the H20 ban. Deutsche Bank ($125 PT) maintains a hold, acknowledging Nvidia's AI leadership but viewing the stock as fairly valued after its recent run-up, though expecting a revenue beat driven by Blackwell and Hopper GPUs. Key factors for the upcoming report include management's guidance on the H20 ban's ongoing impact, demand for new products like Blackwell, the resolution of rack production issues, and commentary on customer capex, particularly from sovereign entities.

Key Decisions for Investors

• Investors should anticipate potential near-term volatility around the earnings release, given analyst concerns about a 'messy Q2 guide' and the recognized impact of China restrictions on current quarter sales.
• Long-term oriented investors may consider the prevailing bullish analyst consensus on Nvidia's AI leadership and secular demand trends, viewing any earnings-related dips as potential accumulation opportunities, particularly focusing on management's outlook for Blackwell and rack-scale system supply.
• Closely monitor management's commentary on the sustained impact of China restrictions, progress on redesigned compliant products for that market, and the strength of demand signals from hyperscalers and emerging sovereign AI investments as key indicators for future growth.
• Evaluate exposure in light of the stock's recent 24% appreciation, weighing the strong long-term AI narrative against valuation concerns highlighted by some analysts and the acknowledged near-term headwinds from geopolitical factors and supply chain adjustments.