Nvidia shares turned positive in premarket trading Thursday, erasing earlier losses.
Bernstein analyst Stacy Rasgon sees why Nvidia bears might have found negatives in areas like the company's smaller-than-usual guidance beat, forecast for declining gross margins and drop in networking attach rate.
But he still advised clients to "stop and smell the roses."
While gross margins are forecast to turn lower again in the current quarter, "frankly we aren’t going to complain about a couple quarters at 71-72%, especially as they are driven by the company’s efforts to ramp their new platforms as quickly as possible to meet what appears to be at this point insatiable demand," Rasgon wrote. And he noted that the company has "a trajectory back toward the mid 70’s as the platforms scale" into fiscal 2026.
Worried about Nvidia's Blackwell supply constraints? Look on the bright side, according to Melius Research analyst Ben Reitzes.
"We tend to like 'constraints' — since it means more sales are coming later," he wrote in a note to clients. The company could be setting the stage for revenue acceleration once the supply constraints ease, and margins could tick higher as well.
After Nvidia's earnings, Citi analyst Atif Malik is looking ahead to January's CES conference, at which CEO Jensen Huang will share more on the company's artificial-intelligence vision during a keynote address.
Malik opened a positive catalyst watch on Nvidia's stock heading into that event, "where we expect Blackwell sales expectations to move higher and management to talk about the inference-led enterprise and robotics industrial demand inflection." Blackwell is Nvidia's newest chip.
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