Wall Street anticipates another strong quarter for Nvidia (NVDA:NASDAQ) as investors’ favourite chip stock prepares to release fiscal second-quarter 2025 results (28 Aug), so the pressure is on.
There’s been no sign that demand for the firm’s high-end graphics processing units is waning, the benchmark for running generative AI workloads, but good hasn’t been good enough for Nvidia for months: only great will push the ceiling of the stock’s elevated levels.
That’s where things could get sticky. Reports of delays to its Blackwell chip have been doing the rounds, causing no end of near-term volatility in the share price. During the past month, the stock has seen $123 levels whittled away to below $100, only to strongly rebound to $130.
Many longer-term investors will shrug off this sort of wild short-term run, uncomfortable as it may be. Blue Whale Growth (BD6PG78) fund manager Stephen Yiu took to X (formerly Twitter) to express his own view of the recent shake-out, saying ‘we actually like market volatility, which had nothing to do with the fundamental earnings power of a company. On Black Monday, we took the opportunity to increase Nvidia at $95 and have made over 20% within a week’.
Even so, Nvidia’s management commentary and supply-chain data in the coming weeks will be important if the company is to reinforce confidence in the company’s earnings potential for calendar year 2025, according to Goldman Sachs analysts.
They believe that the market is likely to overlook any negative impacts from a shift in the Blackwell ramp timing, projecting robust sequential growth in Nvidia’s Data Center revenue. This growth is expected to be driven by strong demand for Hopper-based GPUs, early shipments of Blackwell products and expansion in Nvidia’s Networking business, even if there are transitory headwinds related to Blackwell.
The analysts also note that customer demand remains strong among large cloud service providers and enterprises, with Nvidia maintaining a solid competitive position in AI and accelerated computing.
They highlight several supportive indicators, such as Taiwan Semiconductor Manufacturing’s (TSM:NYSE) improved outlook for AI demand, an increase in Advanced Micro Devices’ (AMD:NASDAQ) full year Data Center GPU revenue outlook and positive comments from major US cloud hyperscalers (AWS, Azure etc) about their plans to expand AI infrastructure investments.
Consensus forecasts put fiscal 2025 earnings at $2.73 per share, more than double last year’s $1.30, ramping again in fiscal 2026 to $3.79. Second-quarter earnings and revenue are estimated at $0.64 per share and $28.5 billion respectively.
Disclaimer: The author (Steven Frazer) owns shares in Blue Whale Growth Fund.
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