Wall Street analysts expect Nvidia’s Q1 earnings on Wednesday (after the bell) to be “messy” and include disappointments on key metrics.
However, the expected near-term weakness is hardly a reason to bail on NVDA shares – they’re telling clients heading into the company’s release.
Note that Nvidia stock has already rallied some 45% in less than two months.
US export regulations to weigh on Nvidia’s Q1 earnings
Street has muted expectations for Nvidia’s first-quarter as the AI darling is caught in the crosshairs of rising trade tensions between the US and China.
The multinational has already announced that tightened export restrictions on its H20 chip under the Trump administration are making it lose market share in China and will result in a $5.5 billion charge in its fiscal Q1.
Plus, the financial consequences of those restrictions in their entirety will only unravel over time. So, NVDA could resort to a cautious guidance on Wednesday as well.
That said, Nvidia shares remain worth owning for the long term, particularly if “the management is convincing that supply of racks and non-rack Blackwell is improving, and that there’s potential for H2 acceleration,” said Joseph Moore – a Morgan Stanley analyst in a report this week.
AI demand could push NVDA shares up in the second half of 2025
Long-term investors should look past the upcoming quarterly release because Google announced a series of artificial intelligence initiatives at its I/O developer conference earlier this month.
Additionally, San Francisco based Anthropic has recently launched “Claude 4” – its latest and most advanced AI model to date.
Together, these developments signal continued demand for Nvidia products, argued BofA analysts in their recent note, adding “if you can’t see the usage/adoption of AI has hit an explosive inflection in the past two months … I don’t know what to tell you.”
Despite a sharp rally in recent weeks, NVDA stock is down some 10% versus its year-to-date high.
Nvidia remains committed to removing the China overhang
Investors should also focus on recent reports that Nvidia could soon launch a toned-down version of its most-popular Blackwell chip to bypass export restrictions and resume business in China.
If these rumours prove true, NVDA shares will likely respond with a big move to the upside.
That’s part of the reason why Piper Sandler analysts also recommend that investors “weather the uncertainty” and remain invested in this AI stock ahead of its Q1 earnings release.
Expectations are for Nvidia to report per-share earnings of 80 cents for its first quarter today, up some 38% on a year-over-year basis.
Heading into the quarterly update, Wall Street has a consensus “buy” rating on Nvidia stock with the average price target of about $163 indicating a potential upside of more than 20% from current levels.
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