Nvida (NVDA) Stock: AI Chip Giant Climbs as Earnings Day Showdown Approaches

TLDR

• NVIDIA stock rose over 4% ahead of its Q4 earnings report
• Wall Street expects 73% revenue growth to $38.2B and 63% EPS growth to $0.84
• Analysts maintain bullish outlook with 56 of 60 rating it as “Buy”
• Morgan Stanley predicts Asian AI stocks could rise 3-15% if NVIDIA beats expectations
• Recent concerns include potential trade restrictions, Blackwell chip delays, and AI spending slowdowns

NVIDIA Corporation (NVDA) shares climbed more than 4% early Wednesday as investors prepared for the chip giant’s fourth-quarter earnings report, scheduled for release after market close.

The results are widely viewed as a critical test for the broader artificial intelligence sector, with implications extending beyond U.S. markets to Asian technology stocks.

The Santa Clara-based AI chipmaker has been at the center of the artificial intelligence boom, supplying the expensive graphics processing units (GPUs) that power large language models and other AI applications.

Tech giants Microsoft, Amazon, Google, and Meta collectively purchased an estimated $44 billion worth of NVIDIA’s GPUs during the 2024 calendar year, according to analysis from DA Davidson.

Wall Street has set high expectations for NVIDIA’s fourth-quarter performance. Analysts project revenue to increase by 73% to $38.2 billion and earnings per share to jump 63% to $0.84 compared to the same period last year. These forecasts reflect continued strong demand for NVIDIA’s AI chips, despite recent market concerns.

After months of steady gains throughout 2024, NVIDIA stock has moved sideways over the past six months. Shares had declined 9% over the five trading sessions ending Tuesday, driven by broader market concerns about inflation linked to President Donald Trump’s trade and immigration policies. The stock found support near its 200-day moving average before bouncing back on Wednesday.

Adding to recent pressure on NVIDIA shares were reports that the Trump administration might implement tighter export controls on chip sales to China, potentially limiting NVIDIA’s access to that market. Investors have also expressed concern about possible delays related to NVIDIA’s next-generation Blackwell AI chips and servers, which are expected to drive future growth.

Asian AI Stocks

The earnings report could also have a major impact on Asian AI-related stocks, according to Morgan Stanley. The investment bank estimates that if NVIDIA’s revenue exceeds expectations, Asian AI stocks might see price increases of 3-15%. Conversely, if NVIDIA falls short of projections, those same stocks could decline by 5-10%. The anticipation has already sparked volatility in Asian markets, with the Hang Seng Index jumping 3.3% ahead of NVIDIA’s report.

Despite recent stock price consolidation, most analysts remain optimistic about NVIDIA’s prospects. Of the 60 analysts tracked by Yahoo Finance, 56 maintain “Buy” ratings on the stock, with an average price target of $171.64 over the next 12 months. This represents approximately 30% upside from Wednesday’s trading levels around $132.

BofA Securities analyst Vivek Arya outlined three potential scenarios following NVIDIA’s earnings report. His baseline view anticipates a fourth-quarter beat with in-line guidance for the first quarter, reflecting a slower Blackwell chip rollout and potential China trade restrictions. In a bull case scenario, both Q4 sales and Q1 revenue guidance would exceed expectations by $1-2 billion, supporting further stock gains.

However, if NVIDIA reports merely in-line Q4 results and provides lower Q1 guidance with reduced gross margins, the stock could fall to the lower end of its recent trading range, according to Arya. Nevertheless, he maintains a “Buy” rating with a price target of $190.

Gains for Patient Investors

Looking beyond the immediate earnings reaction, historical patterns suggest potential longer-term gains for patient investors. According to Yahoo Finance analysis, buying NVIDIA stock just before earnings announcements has yielded a median return of up to 4% over a one-month period during the past decade. However, investors who held for three months saw returns of nearly 18%.

The upcoming GTC conference, scheduled for March 17-21 in San Jose, could provide another catalyst for NVIDIA stock. Often described as “AI Woodstock,” this annual developer conference typically features new product announcements and technological advancements that could renew investor enthusiasm for NVIDIA’s growth story.

With NVIDIA shares trading around $132 after Wednesday’s early gains, all eyes will be on the earnings report to determine whether the AI chip leader can maintain its growth trajectory and justify its premium valuation in an increasingly competitive landscape.

NVIDIA stock currently sits in a consolidation pattern with a technical buy point of $153.13, according to IBD MarketSurge charts, though it remains in the lower half of its base pattern after falling below its 50-day moving average line.

In early Wednesday trading, NVIDIA stock led the broader market higher as investors positioned themselves ahead of what could be a market-moving earnings announcement that may set the tone for technology stocks in the coming weeks.