Even with uncertainties out of China pertaining to the H20, Nvidia’s (NASDAQ:NVDA) results and guidance made one thing clear to investors: the artificial intelligence spending boom is still accelerating.
“Sentiment has shifted to become much more positive, yet the company still cleared the bar,” Morgan Stanley analyst Joseph Moore wrote in a note to clients. “Just a few weeks ago consensus was $50B and there were fears of digestion, and now coming into the print consensus had risen to $53B including some China (which did not materialize in guidance). That guidance for $7B of incremental revenue — the first time that a company has guided for that dollar sequential growth — without China. That’s in just one quarter, and based on the commentary we heard from management on the call — and what we continue to hear from [our] checks — continues to represent undershipment of true demand. The continued strength in Hopper is a testament to that, as compute shortages remain intense enough customers are still buying three-year-old Hoppers to serve some of that demand.”
Moore added that the company’s position in China is “impossible” to forecast and Nvidia management were cautious on the earnings call. However, the guidance of $54B in revenue for the October quarter is a testament to the true demand for AI, Moore added. He has an Overweight rating on Nvidia and slightly raised his price target on the stock (to $210 from $205) after the results.
Jefferies analyst Blayne Curtis was also effusive in his praise, as he pointed out demand for both Hopper and Blackwell is “rock solid.”
“Broader demand outlook remains intact, underpinned by improving ROI dynamics with $3M investment in GPUs now generating up to $30M in token revenues, accelerating hyperscaler Capex, and Sovereign expected to make up $20B of revenue this year,” Curtis wrote in a note to clients. “Everything remains sold-out across both Hopper and Blackwell, with one non-restricted customer even buying H20s. Plenty of runway for continued growth in both Compute and Networking as [the] situation in China continues to work itself out.” He has a Buy rating and upped his price target to $205 from $200.
Wedbush Securities analyst Dan Ives said the results and guidance are just another feather in Nvidia’s cap.
“With AI infrastructure investments continuing to grow with the company expecting between $3 trillion to $4 trillion in total AI infrastructure spend by the end of the decade, the chip landscape remains NVDA’s world with everybody else paying rent as more sovereigns and enterprises wait in line for the most advanced chips in the world,” he wrote in a note to clients.
Stone Fox Capital, Investing Group Leader for Out Fox The Street, said the stock is “cheap,” even at 25 times fiscal 2028 earnings, “considering the upside potential with another beat, guide up and future inclusion of Chinese chip sales.”