Nvidia and CEO Jensen Huang get a pass for an earnings whiff: What Wall Street is saying
Nvidia's (NVDA) first quarter results left much to be desired, but it looks like Wall Street is shaking off the obvious bad news for now.
Shares in the AI chip giant gained 5% before the bell on Thursday, despite the company posting a once-unthinkable quarterly profit miss after the market close on Wednesday.
The magnitude of the earnings whiff — a shortfall of $0.12 per share — was another disappointment.
Nvidia pinned the shortfall on the impact of the US ban on shipments of its H20 chips to China. The company also said it expects to lose out on roughly $8 billion in sales of H20s in the second quarter.
As to why stock investors are looking past the profit miss, analysts point to a few factors.
For one, Nvidia said it would continue to work toward achieving a mid-70% growth profit margin late this year. The number was important to hear for Nvidia bulls, and reflects Nvidia executives' confidence in an efficient ramp-up in production of its Blackwell chip.
And two, Nvidia founder and CEO Jensen Huang said global demand for its AI infrastructure products is "incredibly strong."
The chip giant also talked up accelerating AI usage demand at Microsoft (MSFT), OpenAI and other hyperscalers on the earnings call.
"No beat and raise again, but good enough to avoid disappointment," HSBC analyst Ryan Mellor said in a note.
Here's what Wall Street more broadly is saying about Nvidia's quarter. (To track post-earnings trends on the Street for Nvidia, such as sales and earnings revisions, head to the 'analysis' section on Yahoo Finance.)
Rating: Buy (reiteration)
Price Target: $180 (raised from $150)
"Nvidia continues to emphasize that the Blackwell launch is the fastest product launch in company's history. While management did not disclose the total contribution from the platform in the quarter, comments suggest it was at least $24 billion vs $11 billion last quarter. We view this positively as expectations were for ~$20 billion Blackwell's this quarter. We think Nvidia's Blackwell will continue to see demand running well above supply. In fact, the company's key supplier such as Wistron estimates shipping 100-200 NVL servers per week in the first quarter and now expects a 3x increase by June. We expect Blackwell units to surpass 900K units in the July quarter given its faster-than-expected adoption and deployment."
Rating: Neutral (reiteration)
Price Target: $135 (raised from $120)
"China is, and will remain the largest overhang on Nvidia shares until we get resolution from the Trump administration. It was highlighted that the company will experience 'material adverse impact on [their] business going forward,' if they are unable to sell into the Chinese market at all, even beyond the immediately outlined impact from this quarter and next on H20 bans. Nvidia estimates that the Chinese market represents roughly $50B in total addressable market within the near-future, and without having a product to serve this market, they are handing the entire Chinese opportunity to homegrown manufactures such as Huawei. According to Mr. Huang, China, despite the prevailing insinuation from current policy, has the capabilities to compete head-to-head with the United States in chips and AI."
Rating: Overweight (reiteration)
Price Target: $190 (reiteration)
"We see Nvidia as remaining uniquely positioned to benefit from AI/ML secular data center growth within the industry. With significant barriers to entry created by its CUDA software stack, we see limited competitive risks and expect Nvidia to continue to dominate one of the fastest growing workloads in cloud and enterprise. While early days, Omniverse represents an emerging software subscription revenue stream for metaverse applications that is likely to support further re-rating of the multiple as it grows and scales."
Rating: Buy (reiteration)
Price Target: $180 (reiteration)
"While lost Chinese revenues indeed weigh on Nvidia's long-term outlook, we are encouraged by commentary surrounding long-tailed DC opportunities, in both processors/accelerators and networking infrastructure."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram and on LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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