Nvidia Q1 earnings preview: what analysts expect and how to trade NVDA stock

Analysts anticipate a potentially weak Q1 earnings report from Nvidia, impacted by US export restrictions in China resulting in a $5.5 billion charge; however, Wall Street maintains a generally bullish outlook on NVDA, citing continued strong AI demand driven by new initiatives from Google and Anthropic. Despite near-term headwinds and a 45% rally in the last two months, analysts suggest long-term investors should focus on Nvidia's potential to navigate export restrictions and capitalize on sustained AI growth, with a consensus "buy" rating and a $163 price target indicating over 20% upside.

Analysis

Nvidia is poised to release its Q1 earnings amidst Wall Street expectations of a "messy" report, potentially featuring disappointments on key metrics due to US export regulations. These restrictions, particularly on its H20 chip, are anticipated to result in a $5.5 billion charge in fiscal Q1 and are already causing a loss of market share in China, with the full financial impact likely to unfold over time. This situation may lead Nvidia to issue cautious forward-looking guidance. Despite these near-term headwinds and the stock's significant 45% rally in under two months (though still down approximately 10% from its year-to-date high), analysts largely maintain a long-term positive outlook. Morgan Stanley suggests the stock remains a hold if management can demonstrate improvements in the supply of racks and non-rack Blackwell systems, alongside potential for H2 acceleration. Bank of America analysts point to continued robust AI demand, evidenced by recent initiatives from Google and Anthropic's launch of "Claude 4," as an indicator of an "explosive inflection" in AI adoption that will benefit Nvidia. Furthermore, reports suggest Nvidia may launch a modified Blackwell chip to navigate export controls and re-engage the Chinese market, a development Piper Sandler analysts believe justifies weathering current uncertainty. For the upcoming Q1 report, analysts expect earnings per share of 80 cents, a 38% year-over-year increase. The consensus Wall Street rating for NVDA is a "buy," with an average price target of $163, implying a potential upside of over 20% from current levels.

Key Decisions for Investors

• Investors should brace for potential near-term volatility in NVDA shares around the Q1 earnings release, given expectations of a challenging quarter impacted by export restrictions and a possible cautious outlook from management.
• Long-term investors may consider looking past the immediate quarterly results, focusing on management's commentary regarding Blackwell supply chain improvements, strategies to mitigate China-related headwinds, and the sustained underlying demand for AI technologies.
• Key catalysts to monitor include any announcements on new chip versions designed to comply with export rules for the Chinese market and explicit guidance on the H20 chip's performance and future Blackwell ramp, as these could significantly influence the stock's trajectory.