- Nvidia's latest earnings will be crucial as investors watch for AI updates from CEO Jensen Huang.
- Wedbush's Dan Ives and Morgan Stanley's Joe Moore predict Nvidia will exceed earnings estimates.
- Ameriprise emphasizes Nvidia's production ramp of its Rubin model.
Nvidia earnings reports tend to be market-moving events, and the company's report on Wednesday could be particularly momentous as Wall Street goes through a bout of AI anxiety.
With AI spending from hyperscalers increasingly under scrutiny, any waning in demand for Nvidia's products could signal a slowdown of the AI boom, which investors have bet big on over the last few years.
The AI trade is also generally under close watch at the moment, as Anthropic's Claude AI disrupts industries and reorders the list of stock winners and losers.
"Nvidia remains central to the AI narrative. We see hyperscaler capex as the clearest real-time indicator of AI demand," said Lauren Goodwin, the chief market strategist at New York Life Investments, in an email on Tuesday. "As long as companies continue to deploy capital aggressively into AI infrastructure, we do not see evidence of a rollover in this theme. The foundational layer of AI remains supply-constrained."
Wall Street is expecting the chip giant to deliver $65.91 billion of revenue, with $60 billion of that coming from its all-important data center business.
As the market heads toward the blockbuster report on Wednesday afternoon, here's what analysts say to keep an eye out for.
Wedbush
Dan Ives, the bullish Wedbush tech analyst, said he expects Nvidia to handily beat earnings estimates.
But perhaps above all else, investors will be paying attention to CEO Jensen Huang's tone and outlook for chip demand going forward.
"There is one company that is the foundation for the AI Revolution and that is Nvidia with the Godfather of AI Jensen having the best perch and vantage point to discuss overall enterprise AI demand and the appetite for Nvidia's AI chips looking forward," Ives wrote in a client note on Monday.
Morgan Stanley
Joe Moore, Morgan Stanley's analyst covering Nvidia, says he would buy the stock heading into earnings on Wednesday, as his contacts in the industry continue to sound optimistic about the company.
Moore has a $250 a share price target on the stock, implying 29% upside.
In the weeks following the report, Moore said to keep an eye on Jensen Huang's appearances at Morgan Stanley's TMT conference and a GTC developer event for more details about the firm's Rubin platform, as they could be upside catalysts.
Ameriprise
Anthony Saglimbene, the chief market strategist at Ameriprise, said to keep an eye out for updates on how successfully Nvidia is ramping up production of its new Rubin model.
"Execution on next-generation platforms, like Rubin, needs to give investors confidence that the company is on track with deployment schedules and that lead times are manageable."
He added that the firm needs to demonstrate that "it can continue to successfully manage an industrial-scale manufacturing ramp not often seen in history."
Charles Schwab
Joe Mazzola, the head trading and derivatives strategist at Charles Schwab, said to watch for heightened investor scrutiny on the firm's profit margins as their production costs grow.
"Though AI spending shows little sign of easing, Nvidia and fellow chip firms face higher bandwidth memory costs amid sector shortages, and this could affect projected margin growth," Mazzola said in an email on Tuesday.
On the revenue front, he said that data centers will be the most important driver to watch, and guidance must also beat the average forecast.
"Nvidia remains under pressure every quarter not to just exceed quarterly consensus, but to guide for growth exceeding analysts' average estimates."
Rational Funds
Similar to Ives, Luke Rahbari, a co-Portfolio Manager for The Rational Equity Armor Fund, said forward guidance is going to be the most important thing to watch. Any hint of negativity could mean trouble for the stock and the rest of the AI trade.
"They're going to have to say that they're seeing year-to-year growth, and that number has to be healthy. It doesn't have to be as healthy as how it's been growing here, but staying steady and growing at that year-to-year clip is what's going to be important," Rahbari wrote. "If they mention any type of slowdown, if they say that year-to-year growth is going to be significantly lower, or if they pull back on investing in some of their own customers, that's going to signal that demand for the chips is lower."
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