AI stocks have pulled back recently on bubble concerns, which has raised the stakes for Nvidia‘s (NVDA) upcoming earnings report.
“The biggest/most important company in the world reports next week,” Daniel O’Regan, Mizuho Securities’ managing director of equity trading, said in a client note Thursday. “The entire AI trade depends on it (not 100%, but it’s big).”
The artificial intelligence chip designer will release its fiscal third-quarter results after the market close on Wednesday.
Analysts polled by FactSet expect Nvidia to earn an adjusted $1.25 a share on sales of $54.8 billion in the quarter ended Oct. 26. That would translate to year-over-year growth of 54% in earnings and 56% in sales.
Supply and demand issues related to AI chips will be a key focus of Nvidia’s Q3 report, analysts say.
According to media reports, Nvidia Chief Executive Jensen Huang has been pushing contract chipmaker Taiwan Semiconductor Manufacturing (TSM) to add production capacity to make its chips.
Meanwhile, Nvidia investors want to see signs that AI chip orders remain robust.
Nvidia stock has fallen since notching a record high of 212.19 on Oct. 29.
In afternoon trades on the stock market today, Nvidia stock dropped more than 4% to 185.63. Other AI chip stocks retreating on Thursday included AMD (AMD), Astera Labs (ALAB), Broadcom (AVGO) and Credo Technology (CRDO).
Nvidia Stock Gets Price-Target Hikes
Susquehanna Financial Group analyst Christopher Rolland reiterated his positive rating on Nvidia stock and raised his price target to 230 from 210.
“We expect better results and guidance as GB300 is expected to continue ramping” in the second half of the year, Rolland said in a client note Thursday. Data center “AI demand continues to be supported by ever-increasing hyperscale capex plans.”
Rolland wondered if Huang will address “intensifying chatter” around global data-center builds hitting a “power wall” beginning in 2028. The AI data center buildout needs increasing electricity, necessitating new power plants.
On Wednesday, Oppenheimer analyst Rick Schafer maintained his outperform rating on Nvidia stock and upped his price target to 265 from 225.
Nvidia “remains best positioned to win in AI,” Schafer said. He noted chip supply constraints and data-center power limitations as bottlenecks for the company.
Nvidia stock is on two IBD lists: IBD Sector Leaders and Tech Leaders.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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