NVIDIA Earnings Forecast: Analyst Predicts Disappointment as “Positive Clearing Event”

NVIDIA Earnings Forecast: Analyst Predicts Disappointment as “Positive Clearing Event”

The contents of this article do not constitute investment advice. The author holds no shares in any of the stocks discussed herein.

Recent Developments Impacting NVIDIA Shares

Just weeks ago, NVIDIA’s stock seemed to teeter on the edge of a significant downturn, affected by an extensive trade war and the Trump administration’s steps to separate China from Western semiconductor technology. However, the landscape is shifting. The two largest economies, the U. S.and China, are experiencing a tentative thaw in relations, coinciding with the anticipated retirement of the Biden administration’s AI diffusion regulations. This is poised to be replaced by a more strategic chip licensing framework that may be negotiated directly between governments.

Analyst Insights and Revisions

Amid these evolving circumstances, analyst C. J.Muse from Cantor Fitzgerald remains optimistic about NVIDIA. He has reiterated an ‘Overweight’ rating for NVIDIA stocks and set a price target at $200. Muse acknowledges that expectations have surged following AI announcements from the Middle East and the Computex trade show. He considers NVIDIA’s upcoming earnings call on May 28 to be a crucial turning point.

Revenue Projections and Market Dynamics

Muse anticipates that NVIDIA will announce revenue guidance of $46 billion for the quarter ending in July, slightly below consensus expectations of $46.3 billion. This minor dip reflects the approximately $5 billion impact stemming from the Trump administration’s licensing requirements on NVIDIA’s H20 GPUs designed for the Chinese market, albeit somewhat counterbalanced by a projected strong ramp-up in its Blackwell products.

Future Shipment Expectations

Looking ahead, the analyst projects an acceleration in NVIDIA’s rack-scale shipments by the second half of 2025, supported by the ramp-up of the GB300 GPU production coming in Q4 2025. Muse estimates that NVIDIA will ship around 25, 000 units of its rack-scale GB300 systems throughout the calendar year 2025. He also expects the company’s data center segment to generate around $200 billion in revenue for CY 2025, which surpasses the consensus estimate of $175 billion.

Gross Margin and Earnings Outlook

In addition, Muse anticipates that NVIDIA will reaffirm its guidance for a gross margin in the “mid-70s”for the latter half of 2025. He elaborates on the current stock pricing:

“While shares have rallied considerably from the recent April 7th lows, shares still only trade at 26.8x/19.9x our expected CY25/26 earnings outlook. Couple this backdrop with our vision for this earnings report to mark a clearing event with strong line-of-sight to reacceleration of revenues into 2HCY25 and we continue to see meaningful upside for shares.”

Conclusion and Outlook

In summary, while Muse predicts NVIDIA’s upcoming quarterly guidance may not meet market expectations, he views this as a setup for a robust recovery in the latter half of 2025. He describes the anticipated earnings release as a “clearing event, ”which could eradicate lingering bearish influences on the stock.

Industry Reactions

Meanwhile, NVIDIA’s CEO, Jensen Huang, has publicly criticized the Biden administration’s AI diffusion rules. He asserts that these regulations are misguided, arguing that they position China on equal footing with the U. S.in the AI sector. Huang further contends that restricting China’s access to advanced chips would inadvertently strengthen domestic Chinese competitors, which may jeopardize established Western firms.

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