Nvidia (NASDAQ:NVDA) is scheduled to report its Q2 earnings tomorrow, and spoiler alert: it’s likely to be a blockbuster.
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Analysts on average are forecasting per-share profits to more than double to $0.57 in Q2, and for revenues to surge to $25.6 billion. What’s more, Nvidia has been beating earnings forecasts for more than a year now, so even those large numbers could turn out to be conservative.
Getting a jump on the good news was Wedbush analyst Daniel Ives, who penned a note describing Nvidia’s upcoming report as literally the “most important tech earnings in years.”
Curiously, though, Ives’ focus was not on Nvidia’s earnings per se. Rather, Ives put the focus of his report on what Nvidia’s earnings mean for everybody else in the tech sector.
Nvidia, says Ives, is “the foundation for the AI Revolution,” producing AI-tailored semiconductors that are “the new oil and gold in this world,” and CEO-ed by “the Godfather of AI” Jensen Huang, the man with “the best perch and vantage point to discuss overall enterprise AI demand and the appetite for Nvidia’s AI chips looking forward.”
At the last report, all systems still seemed to go for the AI revolution and the “$1 trillion” in capital spending expected to be thrown into computer ships over the next few years. “Cloud numbers and AI data points from” Microsoft, Amazon, and Alphabet were all “very strong during earnings season the last few weeks,” seeming to confirm that “massive enterprise AI demand is now underway.” Assuming Huang says nothing to upset that thesis tomorrow, Ives predicts that tech stocks in general should continue to move higher.
Not just through the end of 2024, either, but into 2025 as well. In addition to tech companies spending on AI services (and AI services spending on AI chips from Nvidia), Ives reminds that the Federal Reserve is itching to start cutting interest rates to help guide the economy to a soft landing. If it succeeds, not only will the withdrawal of recession risk help push stocks higher. The lower interest rates themselves – generally considered a positive for the stock market – will provide a tailwind to stocks.
And the good news might not end there. Ives argues that despite some still eye-popping valuations in tech-land, the stock market today doesn’t so much resemble a circa-1999 tech stock bubble as it does a circa-1995 or -1996 pre-Internet Revolution landscape. Nvidia, argues the analyst, is laying the foundations for explosive growth across the industry, with each $1 spent on Nvidia chips leading ultimately to a “$8-$10 multiplier across the tech sector,” that could drive tech stocks of all stripes higher over the next several years.
Tl;dr: The fun’s just getting started, and it all starts with Nvidia’s earnings report tomorrow.
Overall, Nvidia has most of Wall Street’s analyst corps on its side. Of 36 recent analyst reviews, 33 rate NVDA a Buy, with only 3 recommending a Hold, resulting in a Strong Buy consensus. Over the next year, shares are expected to rise by ~16%, considering the average price target stands at$149.89. (See NVDA stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
