At the last earnings call for Nvidia Corp., Melius Research expert Ben Reitzes thought it was one of the best he had ever heard. Can the company put on the show again next week?
In the chip company’s most recent earnings report and call, there was what Reitzes called a “Triple Lindy.” That’s a reference to the movie “Back to School,” in which one of the characters does a difficult dive that involves rebounds off of several boards and making it work.
For Nvidia (NVDA 4.55%), a Triple Lindy would mean beating revenue estimates for the most recent quarter by $2 billion, giving guidance for the current quarter that’s $2 billion higher than what gets posted for the most recent quarter, and saying enough to suggest that another $2 billion in sequential revenue growth would be possible for the January quarter.
“As we write this, this possibility seems possible—but it isn’t necessary for those with a long-term view,” Reitzes wrote before Nvidia’s earnings report on Wednesday afternoon.
He said it’s “pretty easy to be off by a billion here and there with numbers this big.” Nvidia is getting close to making $105 billion from its data centers in fiscal 2025, which ends in January.
Reitzes thinks that the most important thing for management to do might be to give investors a reason to believe in the growth estimate for next year. For example, experts think that Nvidia’s data centers will bring in about $150 billion this coming fiscal year. People who invest “need comments that
It’s still possible for Blackwell to make the Street’s prediction look low, Reitzes said.
The new chip from Nvidia is called Blackwell, and it’s said to be experiencing some shipping problems at first. Reitzes wrote, “There is speculation that TSMC is having trouble matching the ramp of this new technology to meet Blackwell volumes.” However, Nvidia “may not need to address all the potential issues if it seems on track” and the latest quarter’s results look good.
As Reitzes said, investors “need to be assured of a sampling timeline for Blackwell” in the fall that could lead to “robust” performance in the first half of 2025 and beyond. He also kept his buy call and $160 price goal.
Mark Lipacis, an analyst at Evercore ISI, told investors to buy Nvidia shares before the story came out. He said that hyperscale cloud companies’ capital spending “is one of the best indicators of demand for [Nvidia] systems.” His research showed that spending went up by 20% from the first quarter to the second. Hyperscale capital spending might go up by 8% from the second quarter to the third and by 10% from the third to the fourth.
Lipacis looked at other times when Nvidia products were delayed and thinks that a bad news report about Blackwell could cause the price to drop by 5 to 10 percent in the near future. He said that the company “has shown itself to be very good at quickly coming up with other solutions.”
“Also, if there is a delay, we think demand will be so high, especially at Tier 2 and 3 [cloud service providers] and businesses…” that Hopper answers from the current generation would be bought even if Blackwell was pushed, he wrote.
Lipacis thinks the stock will do well and sets a goal price of $150, up from $145.
After being all over the place for a few months, Jefferies analyst Blayne Curtis said that “expectations are creeping back up” for Nvidia. His income estimates for the October and January quarters are about $1 billion higher than what most people think they will be. He thinks these numbers are “achievable but likely not beatable.”
“This setup looked good to us at $100, but things get trickier as the stock gets closer to its previous highs,” he said. Thursday, Nvidia stock finished at $123.74, which is about 9% less than its all-time high of $135.58.
Curtis thinks that you should buy the stock.
