Nvidia is sticking with its current strategy despite some concerns from analysts, including a lower cost approach by China-based DeepSeek. Despite this, many experts still believe that Nvidia’s profit will grow due to the global buildout of AI infrastructure.
Aggressive capital expenditures assumptions by hyperscalers like Amazon and Meta underscore the potential for growth in the AI sector. Russell Investments’ chief investment officer Kate El-Hillow says that “the investment [in artificial intelligence] is happening” over the coming decades.
However, some analysts are cautioning that Nvidia’s first quarter earnings per share (EPS) trend has drifted modestly lower over the past 30 days. The Street also hasn’t pushed up its 2025 EPS estimates on Nvidia for more than 60 days.
Nvidia is currently trading at a relatively low forward price-to-earnings (PE) multiple of 32, compared to Broadcom and Marvell Technology at 35 times and 41 times, respectively. Microsoft co-founder Bill Gates even stated that he wouldn’t want to be Nvidia’s CEO because others are working on similar things.
Despite these concerns, many analysts still believe in Nvidia’s potential for growth. HSBC analyst Ryan Mellor reiterated his buy rating, saying that most hyperscalers have revised up their 2025 capex by 4-26%, supporting the thesis that AI GPU demand remains strong.
Keybanc Capital Markets analyst John Vinh also believes that manufacturing constraints won’t be a major issue, as customers are able to push back orders and fill them with other products. Loop Capital analyst Ananda Baruah reiterated his buy rating, saying that Nvidia’s growth prospects remain high due to its leading position in AI.
Bank of America analyst Vivek Arya expects a modest fourth quarter beat but notes that the first quarter outlook could face headwinds from some market factors. Evercore ISI analyst Mark Lipacis believes that Nvidia remains the platform of choice for hyperscalers’ customers and has a strong software ecosystem, putting it 5-10 years ahead of the competition.
Overall, analysts expect positive momentum to resume after the earnings report, driven by Nvidia’s leading new product pipeline and total addressable market expansion into robotics and quantum technologies.
Source: https://finance.yahoo.com/news/what-nvidia-bulls-are-whispering-about-before-its-big-earnings-report-120347483.html