Nvidia (NVDA) will report its latest earnings and revenue figures after today’s close, with street chatter focused on whether investors should buy, sell, or continue to hold before earnings. Long-term investors needn’t worry because NVDA is likely to stay relevant regardless of its results. In fact, the semiconductor giant serves as a bellwether for the entire tech sector, with millions of consumers and investors waiting with bated breath for today’s results.
I was bullish on Nvidia back in October 2024, and I maintain my stance for the same fundamental reasons: the company has a durable competitive advantage in computer processors and is at the forefront of the next generation of computing. With Wall St. analysts supporting my view and forecasting around 40% upside for NVDA stock, this semiconductor stock is primed for further good news later today.
The Bullish Case for NVDA
Nvidia’s application space is broader than just AI. Investors panicked when Chinese company DeepSeek challenged the relevance of pricey chips for AI computations. Getting a “good” large language model up and running on fewer resources may be possible, but that’s a threat to OpenAI, not Nvidia. The chip designer’s processors are used in high-performance computing, self-driving cars, robotics, engineering, and architecture.
The DeepSeek saga has undermined tech investor confidence in the U.S., but the threat from cheaper Chinese alternatives is overblown. Just like in other industries where copycatting and mimicry are being used in both technology and IP, Western firms manage to compete and generate sales.
Did DeepSeek present a superior GPU at a fraction of the cost? The answer is not really. NVDA’s product offering is of higher quality and is therefore higher priced. Thus, my bullish position remains intact, and I believe Nvidia will not become irrelevant any time soon.
According to estimates from Jon Peddie Research, Nvidia maintains a 90% market share in add-in-board GPUs as of Q3 2024. Several estimates from market research firms and Wall Street analysts point to Nvidia’s dominance in the GPU market, and the reason for this position is quite simple: the ecosystem.
Nvidia’s Cuda software integrates nicely with its hardware offerings and gives clients the best investment return. This is why the demand for Nvidia’s chips isn’t slowing down, and they’re actually sold out for 12 months in advance. Because of its superior products, Nvidia has emerged as one of the most profitable companies in the world, as evidenced by its TTM operating margins of 62.7%. I expect this trend to continue in NVDA’s Q4 report, out later today.
NVDA Set to Exceed Expectations for the Ninth Time
Wall Street expects Nvidia to deliver per-share earnings of $0.84 on total revenue of $38.08 billion later today. Last quarter, NVDA’s management pointed to $37.5 billion in sales. If history is any guide, Nvidia will surprise the market, opening up further upside while beating the Street’s estimates again, as it has done over the past eight consecutive quarters.
If Nvidia beats quarterly EPS estimates by $0.01, just being conservative, that would imply a year-over-year growth rate of at least 63%, and I think that is still remarkable. It is unreasonable to expect hyper-growth for multiple quarters, and I would not be surprised if Nvidia’s growth normalized to more sustainable levels.
On margins, Nvidia’s management guided non-GAAP gross margins of 73.5%, down from 75% in Q3 FY2025. The margins are shrinking slightly due to the ramp-up of Blackwell, and this was already communicated by management. Recently, Nvidia’s CFO, Colette Kress, explained, “As Blackwell ramps, we expect gross margins to moderate to the low 70s. When fully ramped, we expect Blackwell margins to be in the mid-70s.”
Top Analysts Reiterate NVDA Buy Ratings
Ahead of the big release, Wall Street analysts issued their ratings and price targets, along with what they expect from Nvidia’s earnings and its forecast for 2026. Raymond James analyst Srini Pajjuri, a five-star analyst according to Tipranks’ ratings, reiterated his Buy rating and $170 price target on NVDA shares earlier this week. The firm expects Nvidia to deliver $39-40 billion in Q4 2024 revenue and provides a forward-looking revenue forecast of $42 billion, which aligns with consensus. The firm noted that capex trends among hyperscalers remain strong and see “no slowdown in Blackwell demand.” Pajjuri’s price target implies an upside of about 35% from current levels, slightly lower than the Street’s consensus.
I also view the capex trends as a price catalyst for Nvidia in 2025. Tech giants Microsoft (MSFT), Meta (META), Alphabet (GOOGL), and Amazon (AMZN) do not seem to be slowing down their AI capital expenditures. They plan to spend about $320 billion collectively on AI and data centers in 2025, a 39% increase from the $230 billion these giants spent in 2024.
Is Nvidia Stock Attractively Priced?
Nvidia is currently trading at 30x its forward earnings estimate—which is relatively cheap if you account for the near-term growth. Analysts on Wall Street expect Nvidia’s earnings to grow by 50% in 2026, which gives it a 1-year forward PEG ratio of 0.6x. It may not be possible for Nvidia to maintain its hypergrowth status, but I am glad to see its growth rate normalizing to sustainable levels. In my opinion, Nvidia is attractively priced going into earnings.
I believe Nvidia’s broader outlook is more important than its headline results today. If Nvidia guides to sales below $40 billion, investors might view it as a decelerating business and sell out of panic. However, that’s when I think new investors with a long-term horizon should open a position because they would be purchasing a high-quality stock at a discount.
Is Nvidia a Buy or Sell?
Wall Street is overwhelmingly bullish on NVDA. The stock carries a consensus Strong Buy rating based on 33 Buy and 2 Hold recommendations, with not a single analyst rating the stock a Sell. NVDA’s average price target of $177.87 implies an upside of about 40% from current levels.
NVDA Offers Long-Term Opportunity Amid Market Volatility
Prospective investors should not consider Nvidia a short-term trade and try to profit from the upcoming earnings release. Instead, they should take a long-term approach with Nvidia and realize that this semiconductor giant remains a key part of the Big Tech puzzle in the coming years. Even the arrival of DeepSeek and the specter of fierce competition cannot change the fact that NVDA creates unique products essential for the modern world to continue its development.
Nvidia’s guidance is a key factor to monitor, as weakening performance could be seen negatively by a twitchy market. However, any short-term weakness makes the stock more attractive for longer-term investors seeking to make an entry at discounted levels.