Nvidia's stock is largely holding its own despite a lack of oomph in the guidance. That reflects how well investors understand the company's narrative and cadence.
Nvidia Corp. came up shy of bullish buy-side expectations with its revenue forecast and projected another sequential decline in gross margins for the current quarter.
So why isn't the stock getting punished much in Thursday trading?
Nvidia's $(NVDA)$ revenue outlook of $37.5 billion surprised Mizuho desk-based analyst Jordan Klein, who thought there was a possibility that Nvidia might underwhelm the buy side with its outlook but didn't think the company would issue a forecast below $38 billion. (The official FactSet consensus was just north of $37 billion.)
Weighing in premarket, Klein thought it was "impressive" that Nvidia's stock was essentially treading water despite the forecasts for revenue and margins. The stock is now hovering between small gains and losses early in the regular session.
That underscores how Nvidia's results weren't "worrisome" or "thesis changing," in his view. The "entire buy side understands the constraints on ramping new Blackwell volumes that should alleviate" in the April quarter and beyond. Blackwell is Nvidia's newest chip.
Analysts broadly encouraged investors to look at the many positives in Nvidia's numbers.
Nvidia "again delivered a beat and raise, although we note guidance was a tad below the 'whisper,'" wrote Susquehanna's Christopher Rolland. "Despite this 'miss,' we are encouraged by robust demand for both Hopper and Blackwell and note the top line would have been higher if not for supply constraints. Notably, H200 revenue grew to double-digit billions of dollars in the quarter."
He has a positive rating and $180 target price on the shares.
Bernstein's Stacy Rasgon took a similar view.
"Bears might point to a smaller-than-typical guidance beat, lower networking attach, and/or another tick down in gross margins into the beginning of next year," he wrote. "But while outlook was perhaps a touch below some of the more bullish whispers it seems respectable enough amid supply constraints, and likely conservative given an uptick in Blackwell [fiscal fourth-quarter] outlook vs. prior expectations and Hopper commentary that seems to point to further upside."
The future is bright for Nvidia, he noted, as demand for Blackwell "still appears off the chart, and is likely to exceed supply for some time to come with the prospect for a very strong forthcoming data-center year still easily in the cards."
Rasgon has an outperform rating and $175 target price on Nvidia's stock.
Meanwhile, Ben Reitzes of Melius Research argued that supply constraints come with one positive for Nvidia. The company's outlook for this January quarter "could be holding back billions - that are pushed into" fiscal 2026, which begins after that. He has a buy rating and $195 target price on Nvidia's stock.
