On Monday, Evercore ISI reiterated its positive stance on NVIDIA Corporation (NASDAQ:NVDA) stock, maintaining an Outperform rating and a price target of $189.00.
The firm highlighted a balanced view of near-term risks and recommended purchasing NVIDIA shares ahead of the company's third fiscal quarter earnings report, which is scheduled for Wednesday, November 20, 2024.
The analyst at Evercore ISI identified several positive indicators supporting their outlook. These include accelerated bookings at cloud service providers, an upward trend in capital expenditures by hyperscale companies, and the expectation that Next (LON:NXT) Twelve Months (NTM) estimates for NVIDIA will likely increase following the earnings call.
Conversely, there are factors that could pose challenges for NVIDIA. The analyst noted a slowdown in revenue growth and the perception among buyers that NVIDIA's financial results would not only surpass expectations but also include an upward revision, which could set a high bar for the company to meet.
Additionally, NVIDIA's stock performance has been strong, outstripping the S&P 500 by 172% year-to-date and by 5% over the past month, which may also impact investor expectations.
In terms of valuation, the analyst views NVIDIA's price-to-earnings (P/E) ratio of 37 times as neutral, noting that it aligns with the company's eight-year median. Looking beyond the immediate quarter, the analyst anticipates that investors will be keenly interested in the January 2025 quarter outlook and long-term visibility, particularly in the growth of NVIDIA's software revenue.
In other recent news, NVIDIA has seen a series of positive developments. Jefferies and Oppenheimer have reaffirmed their Buy ratings, raising their price targets to $185.00 and $175.00 respectively, due to the firm's anticipated strong performance. This is in part due to the robust demand for NVIDIA's products, particularly the Blackwell product ramp-up.
Analysts at HSBC and Susquehanna have also raised their price targets, citing strong demand for NVIDIA's Hopper architecture, Blackwell processors, and the company's growth in the data center sector.
HSBC anticipates NVIDIA's third-quarter sales to reach $35.3 billion, surpassing both management's guidance and consensus estimates. Looking ahead, HSBC's sales forecasts for the fourth quarter of fiscal year 2025 and the first quarter of fiscal year 2026 are $38.0 billion and $42.7 billion, respectively.
In collaboration with SoftBank (TYO:9984) Corp, NVIDIA has launched the world's first combined artificial intelligence and 5G telecommunications network, known as an artificial intelligence radio access network (AI-RAN). This development has potential applications in various sectors, including autonomous vehicles and robotics control.
Lastly, in the semiconductor sector, both Citi and Redburn-Atlantic have given NVIDIA a 'buy' rating, reflecting a positive outlook on the company's prospects in the field of accelerated computing. These are some of the recent developments surrounding NVIDIA.
InvestingPro Insights
NVIDIA's financial metrics and market performance align closely with Evercore ISI's optimistic outlook. According to InvestingPro data, NVIDIA's revenue growth has been exceptional, with a 194.69% increase over the last twelve months as of Q2 2025. This robust growth supports the analyst's positive stance on the company's prospects.
InvestingPro Tips highlight NVIDIA's impressive gross profit margins and its status as a prominent player in the Semiconductors & Semiconductor Equipment industry. These factors contribute to the company's strong market position, which is reflected in its high market capitalization of $3.48 trillion.
The company's P/E ratio of 66.01 is significantly higher than the 37 times mentioned by the analyst, indicating that investor expectations have risen further since the analysis. This aligns with the InvestingPro Tip suggesting that NVIDIA is trading at a high earnings multiple, which could set a high bar for the upcoming earnings report as noted in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 21 additional tips on NVIDIA, providing a deeper understanding of the company's financial health and market position.
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