Why Nvidia’s Stock Appears Attractive to Analysts Despite Earnings Concerns

As Nvidia Corp. prepares for its upcoming earnings report, analysts remain largely optimistic, suggesting that the stock remains undervalued even in light of expected earnings moderation. The artificial intelligence chip maker, which has consistently outperformed revenue expectations in recent quarters, faces a challenging snapshot ahead. However, several analysts see strong underlying factors that could support Nvidia’s stock (NVDA) in the long term.

Continued Buy Ratings from Analysts

In the days leading up to Nvidia’s earnings report, firms such as Evercore ISI, Piper Sandler, and Truist Securities have reiterated their buy-equivalent ratings. These analysts underscore that Nvidia’s current circumstances extend beyond immediate financial metrics, suggesting that long-term value remains intact.

Nvidia is navigating a transition to its new Blackwell platform while still capitalizing on sales from its prior chip lineup, the Grace/Hopper family. With the Blackwell supply expected to be limited initially, this transition period is crucial for investors to consider.

Revenue Expectations and Future Outlook

Piper Sandler’s Harsh Kumar projects that Nvidia could surpass revenue expectations by approximately $1.8 billion for the latest quarter. However, he also believes that as Nvidia moves into a fuller implementation of the Blackwell platform, larger revenue beats may materialize down the line. “We continue to believe Nvidia is sold out for calendar year 2025 and we see an increasing cadence of beats of magnitude as the year progresses,” Kumar indicated, setting a price target of $175 for the stock.

Potential Delays Not a Major Concern

Evercore ISI analyst Mark Lipacis commented on the ramp-up timeline for Blackwell, stating that full production might be pushed to mid-2025 instead of the initial first-half projection. However, he regards this delay as non-problematic for Nvidia, noting that current demand for Nvidia graphics processing units still outweighs supply. Without immediate access to the new Blackwell (B100) chips, many buyers will revert to utilizing the existing Hopper (H100) products.

Investor Sentiment and Recent Stock Performance

Nvidia’s stock faced a slight decline of 2.8% on the Tuesday prior to the earnings announcement, marking its third consecutive day of losses, likely due to investor apprehension surrounding the earnings report. In the last quarter, Nvidia had bested Wall Street estimates by a whopping $1.9 billion, generating $35.08 billion in revenue. However, the previous quarter saw the stock fall after revenue failed to meet overly optimistic analyst hopes.

Truist Securities analyst William Stein characterized Nvidia’s stock, trading around $134, as “quite cheap,” especially considering it’s trading at 23 times the fiscal year 2026 estimates and 25 times overall consensus estimates. Stein’s price target for Nvidia stands at $204. He remarked on the changing dynamics of investor expectations, noting that this quarter is anticipated to yield a more modest revenue beat, estimating sales at $38.08 billion and earnings of 83 cents per share.

Impact of Competitive Developments

Some investors remain concerned about the implications of recent developments involving DeepSeek, a Chinese startup that claims to have constructed AI servers at significantly reduced costs using older generations of Nvidia chips. Nonetheless, capital spending plans recently disclosed by major cloud and social media companies suggest a healthier future outlook for Nvidia’s business.

In discussions with AI engineers, Lipacis noted a consensus within the AI community that the cost improvements suggested by DeepSeek are more evolutionary than revolutionary. Additionally, according to Stein, several industry leaders like Amazon, Alphabet, and Meta have announced increased AI capital expenditure plans for 2025, which are expected to be advantageous for Nvidia.

Conclusion: Long-Term Value Remains

While expectations for this quarter’s earnings may not point to a substantial increase, the analysts maintain a positive sentiment toward Nvidia, expecting more significant momentum by the second half of 2025. Lipacis highlighted that despite transient setbacks, Nvidia’s stock remains underpriced at around 30 times earnings estimates for the upcoming 12 months. He reiterated a price target of $190, asserting that Nvidia stands as the cheapest AI stock in his coverage universe. A slight beat coupled with upbeat commentary regarding visibility for the Blackwell platform could act as a vital catalyst for the stock moving forward.