Does the Latest Nvidia Analyst Forecast Influence Your Investment Strategy?

Susquehanna analyst Christopher Rolland reiterated a Positive rating on Nvidia Corp NVDA with a price target of $850, up from $625.

The analyst noted the company needs a +$1.58 beat on the fourth quarter and estimated fiscal 2025 revenue of $99 billion. The chip designer reports earnings on February 21. 

Rolland expects better results and guidance as checks around Data Center GPUs are solid. 

For Data Center (now >80% of revenue), Al demand remains strong, helped by better hyper-scale capex guidance and recent commentary from Meta Platforms Inc META and Tesla Inc TSLA suggesting continued vital GPU purchases. 

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While some worried about an air pocket ahead of B100, Rolland noted it as increasingly less likely, although the possibility of slowing growth in the third quarter in front of this year-end ramp. 

He noted that H100s generally have been allocated to Nvidia’s largest customers, while the long-tail list has yet to receive ample supply, giving him confidence in first-quarter guidance. 

The analyst noted that supply is still somewhat of a gating issue, but less so, as evidenced by the +53% sequential rise in purchase obligations last quarter and CFO Kress’s continued confidence that supply will increase each quarter through the year. 

Mix shift away from A100s is less a revenue and growth driver now, as Rolland estimated A100 mix to fall from -8% of total Data Center cards in the fourth quarter to just -5% in first-quarter as Nvidia has aggressively shifted towards H100, a nearly 2x ASP benefit. 

Still, a mix shift may benefit in the second quarter when Nvidia ramps the H200 and again in the fourth quarter as the long-awaited B100 ramps. 

Rolland expects Gaming to be in line to slightly better as read-throughs from Advanced Micro Devices, Inc AMD Radeon GPU cards were solid, and PC-SIGnals data suggests modest Nvidia GPU share gains. At the same time, Steam data shows continued 40-series adoption. 

For Pro Viz, Rolland expects continued high demand for Omniverse Al workstation offerings. 

Auto reads are more downbeat, as Nvidia previously called out weaker Chinese EV demand that should linger, and global EV demand is slowing, the analyst flagged.

The analyst expects continued gross margin strength off Nvidia’s strong pricing power but does not expect much upside from these levels >75%.

In short, Rolland expects another strong print but thinks investors have largely priced in this near-term upside, with the size of the beat the real debatable point. 

Rolland now expects revenue of $21.5 billion in the fourth quarter, $23 billion in the first quarter, and $99 billion for fiscal 2025, which is perhaps closer to the whisper number. 

He still views Nvidia as having one of the most significant opportunities ahead and at a reasonable multiple.

Price Actions: NVDA shares traded higher by 1.48% at $731.98 on the last check Wednesday.

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