Nvidia (NVDA), the leading chipmaker, is set to release its financial results for the fourth quarter of fiscal 2025 on Feb. 26 after the market closes. Earnings reports often bring significant volatility, with current options pricing suggesting an 8% potential move in the stock price following the report. Despite recent competition from Chinese start-up DeepSeek, Wall Street analysts remain optimistic about Nvidia. Among 68 analysts covering the company, the consensus rating is “buy,” with a median target price of $175 per share, indicating a potential 34% upside from its current price of $131.
Nvidia’s GPUs are considered essential for accelerating data center workloads, including training large language models and running artificial intelligence (AI) applications. Forrester Research has noted that Nvidia’s GPUs are foundational to modern AI infrastructure. The company also offers complementary data center hardware, such as CPUs, interconnects, and networking equipment, giving it a leadership position in generative AI networking gear. This vertically integrated model allows Nvidia to provide complete AI systems with a low total cost of ownership.
Beyond data centers, Nvidia is exploring opportunities in autonomous driving and robotics, with CEO Jensen Huang projecting a $5 billion revenue run rate in autonomous driving by fiscal 2026, nearly triple the current rate. Overall, Nvidia is positioned as a key player in the AI revolution, with AI-related spending projected to grow at 36% annually through 2030, according to Grand View Research.
For Q4, Wall Street expects Nvidia’s revenue to grow 72% year-over-year to $38 billion, with non-GAAP earnings rising 75% to $0.91 per diluted share. However, the stock’s reaction will depend not only on earnings but also on forward guidance. While increased AI infrastructure investments from hyperscale cloud companies like Alphabet, Amazon, Meta Platforms, and Microsoft could support Nvidia, U.S. export restrictions on semiconductors to China and other countries remain a challenge.
Morgan Stanley analysts, led by Joseph Moore, reiterated Nvidia as their top semiconductor pick but noted that the upcoming quarter may not be a major catalyst. They remain optimistic about Nvidia’s long-term prospects once export control issues are resolved.
For investors, while short-term catalysts should not dictate decisions, Nvidia’s long-term growth potential remains strong. Wall Street forecasts adjusted earnings to grow at 51% annually through fiscal 2026, making the current valuation of 50 times adjusted earnings appear reasonable. Investors with a three-year horizon may consider purchasing a small position in Nvidia both before and after the earnings report to mitigate volatility risks.
— news from The Motley Fool