Nvidia stock is facing a wall of worry ahead of the AI chipmaker's fiscal fourth-quarter report, due out after the market close on Wednesday.
Wall Street expects Nvidia to earn an adjusted 85 cents a share, up 63% year over year, on sales of $38.1 billion, up 72%, in the quarter ended Jan. 26. That would represent a noticeable deceleration from the heady growth numbers it posted throughout 2024.
For the current quarter, its fiscal Q1, analysts are modeling Nvidia earnings of 91 cents a share, up 49%, on sales of $42.07 billion, up 62%.
Truist Securities analyst William Stein sees "three big concerns" heading into the Q4 report.
First, will there be an "air pocket" in sales as customers shift from Hopper systems to Blackwell systems? Second, will production challenges facing Blackwell processors limit their availability? And third, will hyperscale cloud computing services rethink their capex plans after China's DeepSeek showed that AI systems can be made at a lower cost?
In a client note Monday, Stein said those concerns have created "lots of noise," but other data points suggest continued strong sales and demand for Nvidia chips. He rates Nvidia stock as buy with a price target of 204.
Nvidia Stock Retreats Before Q4 Report
On the stock market today, Nvidia stock fell 2.8% to close at 126.63.
On Monday, Nvidia stock dropped 3.1% to close at 130.28. Nvidia and AI chip peers Broadcom and Marvell Technology fell on a disputed report that Microsoft was pulling back on its data center expansion plans.
Wedbush Securities analyst Daniel Ives expects a positive report from Nvidia.
"The market is heavily skewed negative right now around tech sentiment with any whisper of worries/concern from DeepSeek to Microsoft capex causing a brutal ripple impact across the tech ecosystem," Ives said in a client note Tuesday. "We expect another robust performance and clear beat-and-raise special from Nvidia that should calm the nerves of investors."
De-Risk Trade Is Underway
Jordan Klein, a trading desk analyst with Mizuho Securities, said a good report from Nvidia won't matter much to investors.
"Nvidia earnings will not matter all that much, nor change the current unwind, de-risk trade underway," Klein said in a client note Tuesday. "Nvidia management cannot really say anything all that new or conclusive that would push investors headfirst back into AI semis and hardware-related longs that to me just want to go lower on a unwind of all the retail and momentum froth."
Morgan Stanley analyst Joseph Moore reiterated his overweight, or buy, rating on Nvidia stock with a price target of 152 on Monday.
In a client note, Moore said the quarter and outlook for Nvidia have improved over the last 60 days. However, the possibility of further U.S. export controls on semiconductors to China continues to weigh on the company.
Moore expects an in-line guide from Nvidia for the current quarter because of export uncertainty.
"We remain convinced (that) once we get past export controls there will be positive momentum into" second-half 2025, he said.
Nvidia stock is on the IBD Tech Leaders list.
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