Nvidia's stock is moving higher after earnings
Nvidia's stock was pacing toward its best post-earnings performance in two years Thursday morning as investors welcomed the company's outlook for sustainable strong growth.
The chip maker's (NVDA) revenue and next-quarter forecast came in ahead of Wall Street's expectations, but the real highlight was its early projection that revenue could jump more than 70% in the fiscal year that ends in January 2028. That preview was "potentially a needed catalyst for the stock," TD Cowen analyst Joshua Buchalter said in a note to clients.
The company said on its earnings call that its guidance for 70% growth factored in supply tightness, and that the number would have been higher without those constraints. Still, the forecast came in well above the expectation for about 45% growth that had been implied by the FactSet consensus.
In Buchalter's view, that figure is "a strong signal of confidence in visibility" as Nvidia's Vera Rubin chip platform starts production shipments.
Goldman Sachs analyst James Schneider thinks Nvidia could deliver upside to that fiscal 2028 forecast if it continues to work with technology companies on the build-out of data centers to help close the gap between demand from customers and supply.
Raymond James analyst Simon Leopold is now looking even farther out, writing that it "seems possible" for Nvidia to generate $1 trillion in revenue for the fiscal year that ends in January 2029. The FactSet consensus as of Wednesday night was for less than $750 billion in revenue that year. Analysts expect the company to generate $403.5 billion in revenue this fiscal year.
Although Nvidia said it expects some gross-margin compression for the remainder of the current fiscal year, Buchalter noted that Nvidia is projecting that profit metric to land in the 72% to 73% range for next fiscal year. That's lower than recent levels but should fend off any bearish fears, he argued.
Given rising memory-chip prices and growing competition from custom chip programs, Buchalter said Nvidia's guidance range looks "better than worst-case scenarios."
The outlook "is likely to put investors' worries over high spending costs at ease," added Goldman's Schneider.
While bullish and bearish investors are likely sticking to their sides, Buchalter of TD Cowen said he thinks "bulls netted more points," off the report, adding that Nvidia's stock looks "materially undervalued."
Nvidia's stock was up 7% shortly after the market open on Thursday.
Bernstein analyst Stacy Rasgon said the July-quarter results "should remind [Nvidia] investors why they own the stock."
Not only is demand accelerating, he said in a note to clients, but that's happening as Rubin becomes "the largest impending product cycle" in Nvidia's history. Rubin is Nvidia's next-generation artificial-intelligence chip platform after Blackwell.
Additionally, Rasgon said Nvidia's balance sheet is becoming "as much of a moat as their technology." The company is not only securing customers for hundreds of billions of dollars worth of its products through its equity stakes and revenue-sharing agreements, but it can also "support and grow the ecosystem around their products," he said.
TD Cowen's Buchalter said that although Nvidia's confidence in financing its ecosystem partners is unlikely to persuade bears, he's "constructive on the durability" of diversifying spending on AI infrastructure and on Nvidia's "role as a key enabler."
-Nora Redmond -Britney Nguyen
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