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Nvidia stock earnings forecast: Why analysts are bullish

Nvidia stock earnings forecast: Why analysts are bullish

The shares of the semiconductor behemoth Nvidia (NASDAQ: NVDA) entered into an uptrend in the final quarter of 2022 and have been steadily rising ever since. 

In fact, its dominant position in the microchip industry, the growth of gaming, and the emergence of modern artificial intelligence (AI) with platforms like ChatGPT have all ensured that the trend has only been growing stronger.

On the stock market, Nvidia has risen so much since the start of 2024 that many are now eying a possible correction for the company and have started looking for an opportunity to short the stock – and such an opportunity may soon present itself.

Indeed, the company is set to release its earnings report for the fourth quarter of 2023 on February 21 and despite offering very strong numbers and beating expectations in late November, the period saw a brief downturn for the stock.

Are analysts bullish in the lead-up to the Q4 report?

The numerous outlooks, forecasts, and analyses published in Q4 2023 and Q1 2024 have all had a common theme – no matter what happens elsewhere in the stock market, it is expected that the technology sector, and particularly its parts focused on AI, will grow significantly in the coming months and years.

Following from this, it is hardly surprising that the general attitude when it comes to Nvidia and its upcoming earnings report remains highly bullish. The forecasts for the previous report estimated earnings per share (EPS) would come in at $3.39 and revenue at $16.11 billion.

Nvidia managed to significantly beat expectations and instead reported an EPS of $4.02 and revenue of $18.12 billion.

This time, the bar is set significantly higher for the semiconductor blue-chip as the EPS is expected to come in at $4.57 and revenue at $20.36 billion.

Additionally, the recent rating changes have all been from positive to positive, with all major institutions that updated their forecasts since the start of February – including Susquehanna, Mizuho, Cantor Fitzgerald, Morgan Stanley (NYSE: MS), and Goldman Sachs (NYSE: GS) – keeping their ‘buy’ and ‘overweight’ ratings.

Is there cause for concern with Nvidia?

While Nvidia’s fortunes are partially tied to the fate of the gaming and AI industries – and each faces its own set of challenges in 2024 – its continued access to the Chinese market remains the single, most obvious factor that can make or break the company’s future trend.

A major reason for the post-earnings decline in November 2023 has been the news that restrictions on exports to China, imposed by the U.S. government, have jeopardized approximately $5 billion worth of NVDA orders bound for the country.

The chipmaker has since reached an agreement that allowed it to continue selling its products across the Pacific. Still, Chinese companies have reportedly been less than keen on buying the compliant and downgraded models.

The general trend for Chinese companies attempting to reduce their dependence on Western suppliers is also well exemplified by the fact that Baidu (NASDAQ: BIDU) has been, throughout 2023, ordering some of its microchips from Huawei.

NVDA price analysis

Despite the jitters and concerns, optimism has so far ruled the day when it comes to Nvidia’s stock. The company’s shares have been steadily rising since January 1 and are an impressive 50.84% in the green year-to-date.

NVDA YTD stock price chart.

The strong uptrend is also evident on the more short-term charts, and the firm is up 31.07% in the last 30 days, but it traded downward on Thursday, the last trading session, and fell 1.68% in the last 24 hours. Its press time per share price of $726.58 and the associated market cap of $1.8 trillion recently made it the world’s fourth-largest company after overtaking Alphabet (NASDAQ: GOOGL).

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