Semiconductor giant Nvidia’s (NASDAQ: NVDA) reign as the artificial intelligence leader might face threats to retaining investors’ favor based on the company’s earnings report.
Nvidia is particularly grappling with the challenge of surpassing market expectations as its revenue forecasts continue narrowing the gap with analyst estimates, according to The Kobeissi Letter.
For the last quarter of 2024, Nvidia expects a revenue of about $37.5 billion (±2%). This projection exceeds Wall Street’s expectations by just $400 million—the smallest margin in at least two years.
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The concern arises from the fact that this is the second consecutive quarter where Nvidia’s revenue guidance failed to exceed analyst estimates by over $1 billion.
In contrast, during Fiscal Q2 2024, Nvidia delivered a blowout forecast, surpassing expectations by an impressive $3.8 billion.
It’s worth noting that these strong forecasts partly drove Nvidia’s stock rally in 2024. Therefore, Nvidia’s ‘forecast magic’ might be waning if this trend is unsustainable.
One lingering question is whether the AI giant’s expectations have grown too ambitious, making it harder for the company to sustain its momentum in the chip sector.
“Nvidia’s, $NVDA, revenue forecast for the next quarter beat expectations by the lowest margin in at least 2 years. <…> In other words, it is increasingly tougher for $NVDA to impress investors. Have expectations for Nvidia gotten too high?” The platform posed.
Wall Street take on Nvidia forecast
Indeed, the company’s forecast has also caught the attention of Wall Street analysts, who have revised NVDA’s share price.
As reported by Finbold, Bernstein’s Stacy Rasgon noted that the company’s forecast for the coming quarters after its Q3 earnings report was slightly below bullish expectations. However, Rasgon pointed out that NVDA likely has more upside based on an implied Blackwell Q4 forecast.
Similarly, Phillip Securities analyst Yik Ban Chong downgraded Nvidia from ‘Buy’ to ‘Accumulate,’ citing concerns over lower initial margins for the Blackwell chip series. Despite this, he raised the price target to $160 from $155.
Interestingly, depending on the hype around Blackwell, if the chips succeed as anticipated, they will likely help the company generate more revenue.
Amid concerns about struggling to impress investors, there are fears that Nvidia might lose its crown as a top-performing AI stock to other lower-valued equities. Blue Chip technical analyst Larry Tentarelli observed this outlook, noting that the massive market cap above $3 trillion will likely lack room for further upward growth.
Despite the uncertainty, Nvidia reported better-than-expected earnings for the quarter ending September 2024. Revenue came in at $35.1 billion, beating expectations of $33.2 billion, with earnings per share at $0.81 compared to the projected $0.75.
NVDA price analysis
NVDA continues to witness increased volatility, failing to maintain its valuation above the $150 level. Notably, the stock has been known to record swings around its earnings season. At the close of the November 22 session, the equity was trading at $141.95, down 3.22%.
Elsewhere, Trend Spider’s analysis shows Nvidia recently broke below a rising wedge pattern on its daily chart, signaling a potential momentum shift.
The breakdown and a Relative Strength Index (RSI) drop below 60 suggest weakening bullish momentum with key support levels at around $120 and $130.
Featured image via Shutterstock
