Chip manufacturer Nvidia (NVDA -3.09%, After the market closure on Wednesday, 26 February, FY 2025 (which ended in January 2025) will report financial results for the fourth quarter. Income incidence can introduce a great deal of instability. Option prices currently take 8% steps in the stock (up or down) following a quarterly report.
Despite the recent disruptions from Chinese Start-up Dipsek, Wall Street remains rapidly on Nvidia. Among the 68 analysts following the company, the consensus is “buy,” and the medieval target price is $ 175 per share, The Wall Street JournalIt means 34% reverse from its current share price of $ 131.
What investors should know here.
Investment thesis for Nvidia
NVIDIA’s graphics processing units (GPU) is the standard of sleeping to train complex data center workloads such as training and running artificial intelligence (AI) applications. Forester research Analysts commented last year, “Nvidia sets speed for AI infrastructure worldwide. Without NVDI’s GPU, modern AI will not be possible.”
Importantly, NVIDIA supplements its GPU with adjacent data centers, including central processing units (CPU), interconnects and networking devices. In fact, the company has a leadership position in the networking gear used for generative AI. This vertical integrated business model gives a significant advantage to NVidia. The company can manufacture the entire AI system for customers, and those systems usually provide the lowest total cost of ownership.
There are also opportunities beyond the data center in NVIDIA and the data center in the autonomous robot. The section is currently a small fraction of the total sales, but CEO Jensen Huang says that the autonomous-driving revenue will receive a run rate of $ 5 billion in the financial year 2026, which ends in January 2026. This is a revenue run rate from the third quarter. Fiscal 2025.
Here is the lines below: NVIDIA AI is the foundation of AI revolution, and that the market opportunity spreads well in autonomous robots and self-driving cars beyond AI. Grand View Research says that spending on AI hardware, software and services will increase by 36% annually through 2030. Nvidia has a good shot in matching the growth rate.
Image Source: Getty Image.
What does Wall Street expect from Nvidia in Q4
In Q4 of FY 2025, Wall Street hopes that Nvidia’s revenue will increase from 72% to $ 38 billion, while non-GAAP income grows 75% to $ 0.91 per thin shared. Importantly, stock will not increase necessary after an earning. Forward guidance is equally important.
On the one hand, several hypersscale cloud companies discussed the lack of compute-capacity during their recent earning calls and planned to invest in AI Infrastructure in 2025 to resolve the issue. That list includes Alphabet, Heroic, Meta platformAnd MicrosoftGreater spending from companies is a tailwind for Nvidia that can cause strong guidance.
On the other hand, for many years, the US government has steadily tightened export sanctions on semiconductor companies. Those restrictions prevent NVidia from selling China among other countries from selling their most powerful GPU, but also limit exports to about 120 countries. That headwind can lead to weak guidance.
Importantly, Morgan Stanley Analysts led by Joseph Moore recently reiterated Nvidia as their top pick in the semiconductor industry. But he also wrote, “We are not seeing the quarter as a major positive catalyst, but we are convinced that once we get the previous export control (the second half) will have positive speed.”
Should investors buy NVidia stock before 26 February?
Investors should never take decisions only on the basis of short -term catalysts. But the long -term investment thesis for NVIDIA is solid, and the forecast of Wall Street will increase by 51% annually through the adjusted income financial year 2026, which ends in January 2026. This consensus makes the current assessment of 50 times adjusted income cheaper.
At that price, future investors should feel confident of buying a small situation in Nvidia today, provided they have at least three years. However, as I have mentioned earlier, earning events can lead to volatility of share-value. For that reason, investors planning to buy Nvidia stock should buy some shares before earning and some shares after earning.
Randy Zuckerberg, former director of Market Development and spokesperson for Facebook and sister of Meta Platform CEO Mark Zuckerberg, is a member of the board of directors. John McKay is a member of the Board of Directors of Motley Fool, a former CEO of Hole Foods Market, an Amazon Assistant Company. Suzanne Frey, an executive in Alphabet, is a member of the Board of Directors of the Motley Flower. Trevor Jenwin has positions in Amazon and Nvidia. Motley flowers have conditions in alphabet, Amazon, meta platforms, microsoft and Nvidia. Micter flowers recommend the following options: Long January 2026 $ 395 calls on Microsoft and January 2026 $ 405 on Microsoft. The Motley Fool has a disclosure policy.
