With Nvidia stock trading near its all-time high, investors are wondering if it has enough oxygen to continue its ascent. The answer likely will come when the AI-chip leader releases its fiscal first-quarter results late Wednesday.
Analysts polled by FactSet expect the graphics-chip maker to earn an adjusted $5.60 a share, up 414% year over year, on sales of $24.59 billion, up 242%, in the quarter ended April 28. That would mark its fourth straight quarter of triple-digit percentage growth in sales and earnings.
Investors will key in on its guidance for the current quarter. For the fiscal second quarter, Wall Street is modeling Nvidia earnings of $5.96 a share, up 121% year over year, on sales of $26.62 billion, up 97%.
Nvidia stock has been consolidating for the past 10 weeks at a buy point of 974, which is also its all-time high, according to IBD MarketSurge. Last week, Nvidia cleared an early-entry buy point, based on IBD analysis.
On the stock market today, Nvidia stock rose 2.5% to close at 947.80.
Nvidia Stock Gets Price-Target Hikes
On Monday, at least four Wall Street firms raised their price targets on Nvidia stock: Baird, Barclays, Stifel and Susquehanna. All four firms have buy ratings on Nvidia shares. They see continued strong demand for Nvidia's graphics processing units, or GPUs, by cloud computing service providers running AI applications.
Nvidia's quarterly report Wednesday will mark the one-year anniversary of the company delivering a monster beat-and-raise report that accelerated the AI stock boom. It also means Nvidia will start to face tougher comparisons on a year-over-year basis, analysts say.
One headwind for Nvidia has been its inability to source components from its contract manufacturers. The company could be supply constrained through calendar 2024, especially with new products ramping in the second half of the year. Those products include the new Blackwell series GPUs.
While Nvidia is experiencing an improved supply, it still faces shortages of high-bandwidth memory and CoWoS, Rosenblatt Securities analyst Hans Mosesmann said in a client note Monday. CoWoS, which stands for Chip-on-Wafer-on-Substrate, is an advanced packaging technology.
Worries Of Possible Sales 'Air Pocket'
Another concern with Nvidia stock is whether the company will hit an "air pocket" in sales of current Hopper series GPUs when Blackwell series GPUs become available later this year.
"We do not subscribe to the air-pocket theory in the Hopper to Blackwell transition for the July-quarter guide as the transition to B100 is scheduled for later in 2024," Mosesmann said. "In reality, it is the transitions to B200 and GB200 — both of which are 2025 products — that will drive the true generational disruption. We also anticipate that Blackwell will be completely sold out, at least for a year."
Mosesmann rates Nvidia stock as buy with a price target of 1,400.
Piper Sandler analyst Harsh Kumar said he also does not think demand for Hopper GPUs will slip ahead of the Blackwell series launch.
"Customers are wary of taking themselves out of line for Hopper allocation in fears that supply will be further limited for the Blackwell product," Kumar said in a report Thursday. "Furthermore, customers also expect that if they do receive an allocation of B100 chips, then it will most likely not be the full order amount."
Kumar rates Nvidia stock as overweight, or buy, with a price target of 1,050.
Nvidia's results and guidance will have an impact on other artificial intelligence plays such data-center computer makers Dell Technologies and Super Micro Computer. Other companies that stand to benefit from continued strong Nvidia AI chip sales include connectivity-chip makers Astera Labs and Marvell Technology and high-bandwidth-memory chip maker Micron Technology.
Time To Retire Magnificent Seven?
Nvidia stock is on six IBD stock lists including Leaderboard, SwingTrader, IBD 50, Big Cap 20, Sector Leaders and Tech Leaders.
Further, Nvidia stock is one of the so-called Magnificent Seven stocks that had a huge run last year.
In a client note Friday, Goldman Sachs strategist David Kostin said the Magnificent Seven group needs to be retired because they all aren't performing well now. Apple and Tesla are laggards this year while Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia are up in 2024.
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