Nvidia Set For Steady Gains With Software-Centric Shift And Blackwell Transition, Analysts Say

Nvidia Corp NVDA shares are trading higher ahead of this week’s earnings report.

Rosenblatt analyst Hans Mosesmann maintained a Buy rating on Nvidia with a $1,400 price target.

Mosesmann expects Nvidia to beat and raise in the April quarter, albeit not reaching the levels of the January quarter, due to improved supply and anticipated year-over-year deceleration from tougher comparisons.

Also Read: Nvidia Faces Competition as Microsoft Considers AMD for Cloud AI Needs Amid GPU Shortage

The analyst noted that Nvidia still faces shortages of CoWoS and HBM, although the shortage of CoWoS will likely improve as the year progresses.

He did not buy the air-pocket theory in the Hopper to Blackwell transition for the July quarter guide, as the transition to B100 is likely for later in 2024. In reality, the transitions to B200 and GB200, both of which are 2025 products, will drive the true generational disruption. The analyst also anticipates that Blackwell will be completely sold out, at least for a year.

Mosesmann said it is likely that Nvidia will lose unit market share to custom ASICs, Advanced Micro Devices, Inc’s AMD MI300X, and even Gaudi 3 from Intel Corp INTC. However, from a sales and “value” perspective, Nvidia will likely maintain or even increase its market share due to a focus on platform and software stack.

The analyst said that Nvidia’s strategic shift towards software-centric service vectors, such as Omniverse, digital twins, and AI foundry, is a significant development. This move signals a transformation in Nvidia’s business model, which will likely be significantly more software intellectual property-based. Consequently, as per the analyst, the company is poised to extract more value throughout the entire stack, indicating a growth potential.

Mosesmann expects volatility in this week’s print but is nonetheless positively biased on a story that is increasingly resonating with the best secular idea in technology.

Morgan Stanley analyst Joe Moore reiterated an Overweight rating on Nvidia with a price target of $1,000.

Moore’s optimistic view of the quarter and outlook has not changed, though buy-side expectations have risen. 

The analyst noted that this is a robust setup for the Blackwell transition. He flagged that Nvidia shares (and other AI semiconductor names) have been treading water since GTC early this year. 

The analyst expects another strong quarter and outlook from Nvidia this week. He expects steady growth even as supply and demand shift to Blackwell. 

Moore highlighted that six months ago, short-term expectations were very strong, but there was anxiety about durability. Now, fresh on the back of hyperscalers talking up longer-term spending expectations for AI, those longer-term views are more positive, but there is anxiety about a pause in front of Blackwell. 

His checks point to robust and steady growth, even transitioning to Blackwell. 

Moore acknowledged that $2.3 trillion of market cap discounts a longer-term healthy outlook. Still, he noted that other names with AI exposure are even more expensive, particularly for the AI portions of those businesses. The analyst reiterated that through the Blackwell launch, he prefers Nvidia over direct and indirect competitors in his coverage.

Nvidia stock gained 204% in the last 12 months. Investors can gain exposure to Nvidia stock via EA Series Trust Strive U.S. Semiconductor ETF SHOC and VanEck Semiconductor ETF SMH.

NVDA Price Action: Nvidia shares traded higher by 2.5% at $947.84 at last check Monday.

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