Following the release of NVIDIA's (NVDA.US) previous financial report, Wall Street speculated that the company's earnings might not exceed expectations as significantly as in previous quarters.
However, Cantor Fitzgerald analyst C.J. Muse believes that within the semiconductor industry, NVIDIA is the most likely to substantially exceed expectations in the future. He and his team consider NVIDIA to have the most "excess potential" among all the companies they cover.
The key factor driving NVIDIA's potential to exceed expectations is the upcoming Blackwell chip, which is expected to make a significant contribution in the January quarter next year. NVIDIA anticipates that this product line will generate "billions of dollars" in revenue for the January quarter, while Wall Street's forecast is around $4 billion.
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According to NVIDIA CEO Jensen Huang, the market demand for Blackwell is "very crazy," and with NVIDIA's consistent strong execution, Muse believes the company is poised to exceed expectations. He estimates that NVIDIA's revenue for the January quarter will reach about $37 billion, and for the April quarter, it will reach about $41 billion, both figures being about $1 billion higher than the market consensus expectations.
Muse pointed out that the performance of the Blackwell chip "will drive earnings to exceed expectations and alleviate concerns about potential short-term fluctuations in the future," and called it possibly the company's "strongest and most important product cycle" to date. He added that, against this backdrop, NVIDIA "is undoubtedly our most favored company."
NVIDIA's stock price rose sharply again on Tuesday of this week, closing up 4.04% at $132.884, marking a fifth consecutive day of gains. Currently, NVIDIA's stock price is only 2.3% lower than the historical closing high of $135.58 set on June 18.
Mizuho analyst Jordan Klein said that long-term investors and hedge fund investors are becoming increasingly interested in NVIDIA's stock performance, especially in the context of early 2025. The Blackwell chip could lead to a more significant earnings beat because its demand far exceeds supply.
Klein also noted that Foxconn, a contract manufacturer of artificial intelligence servers, recently mentioned in a media interview that the demand for Blackwell chips is very strong, which further fuels market optimism.
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