Nvidia's Q1 Earnings: AI Boom and China Challenges Shape Expectations

What Analysts Think of Nvidia Stock Ahead of Earnings

Analysts may ask CEO Jensen Huang about sales in China after the Trump administration imposed tighter export controls. Nvidia (NVDA) is slated to report fiscal first-quarter results after the market closes Wednesday, with Wall Street expecting a record quarter from the world's second-most valuable company. Analysts on average expect Nvidia to report quarterly revenue of $43.38 billion, 66% higher year-over-year, and adjusted net income of $21.29 billion, or 87 cents per share, up from $15.24 billion, or 61 cents per share, a year earlier. Wedbush analysts said the chipmaking titan will continue to be a beneficiary of huge investments in AI infrastructure from hyperscalers like Meta (META), Google parent Alphabet (GOOGL), Apple (AAPL), Amazon (AMZN), and Microsoft (MSFT). Spending on AI "in particular ends up flowing to [Nvidia] which supplies a disproportionate amount of the AI server value," the analysts said. Analysts may ask CEO Jensen Huang about sales to China after the Trump administration earlier this year imposed tighter export controls. Nvidia has warned of a $5.5 billion charge due to restrictions on its H20 chip, and Huang reportedly called the export curbs a policy "failure" that is driving China to accelerate development of its own AI chips. Oppenheimer analysts expect the impact of the restrictions to be relatively modest. "We see upside ... despite the loss of H20 sales to China," the analysts said, noting that the country now makes up just 5% of Nvidia's total sales. Both Wedbush and Oppenheimer have "outperform" ratings for Nvidia stock, along with price targets of $175. Of the 18 analysts tracked by Visible Alpha, 16 have a "buy" rating for Nvidia stock, alongside two "hold" ratings. Their consensus price target near $164 would suggest about 25% upside from Friday's closing price. Shares of Nvidia have fallen slightly this year though are still up about 25% over the past 12 months.

Nvidia May Beat Q1, But Q2 Sales Could Fall To $41 Billion On China Ban, BofA Securities Analyst Warns - NVIDIA (NASDAQ:NVDA)

BofA Securities analyst Vivek Arya reiterated a Buy rating on NVIDIA Corp NVDA with a $160 price target on Thursday. Arya updated his fiscal first quarter outlook following supply chain insights, investor discussions and Nvidia's remarks at the recent Computex trade show, particularly concerning the U.S. ban on H20 sales to China. He highlighted a disconnect between Nvidia's stated $15 billion in lost China sales, the revised fiscal 2026 (calendar 2025) sales estimate of $10 billion-$12 billion and the more conservative $3.8 billion in consensus revisions. Depending on China shipment timing, this could amplify to a $4 billion-$5 billion headwind in the fiscal second quarter. Gross margin recovery remains a key focus. Arya looks for management confidence in restoring margins to the mid-70s in the second half, driven by Blackwell ramp-up and rack-level product yields. Also Read: Emergence Of UALink As A Viable Alternative Could Challenge Nvidia's Dominance, Analyst Asserts Despite these near-term headwinds, Arya considers Nvidia as a top sector pick, citing its unique position in global AI deployment and potential China sales rebound through redesigned, compliant products later in the year. For the fiscal first quarter, Arya expects a modest beat versus Nvidia's $43 billion guidance and consensus of $43.4 billion. However, the $5.5 billion H20-related inventory write-off may pull gross margins to ~58%, below the 71% guide. He forecasts adjusted EPS at 74 cents, under the consensus of 88 cents. No material H20 impact is expected in the first quarter. Fiscal second quarter consensus has dropped from $48 billion (pre H20 ban) to $46.4 billion, with investor expectations closer to $45 billion-$46 billion. Current models only reflect a ~$2 billion H20 headwind, which may be optimistic if early-year sales were front-loaded. By comparison, Advanced Micro Devices Inc. AMD estimated 47% of its $1.5 billion China impact would hit in the second quarter. Applying that ratio to Nvidia's $15 billion China headwind implies a $7 billion second quarter hit, potentially dropping sales guidance to $41 billion, well below consensus. This would imply an adjusted EPS of ~85 cents, 16% below estimates. Looking further ahead, Arya estimates the $15 billion China sales headwind could bring fiscal 2026 revenue down to $190 billion, 6% below consensus, and adjusted EPS to $3.93, 10% below the current $4.38, or 14% below the pre-ban $4.56 consensus. A potential upside could from a faster non-China Blackwell ramp as Nvidia accelerates testing of its move back to "Bianca" compute boards from the prior decision to move to "Cordelia" boards for GB300 GPU. NVDA Price Action: Nvidia stock is trading lower by 0.76% to $131.82 at publication on Friday. Read Next: Nvidia Powers Big Gains For Quanta, Pegatron As AI Demand Explodes Photo: Shutterstock NVDANVIDIA Corp$131.80-0.77%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum82.17Growth98.78Quality93.95Value6.61Price TrendShortMediumLongOverviewAMDAdvanced Micro Devices Inc$110.45-0.23%Market News and Data brought to you by Benzinga APIs

Is Nvidia Stock a Buy Before May 28?

Few companies have benefited more from the artificial intelligence (AI) hype cycle than Nvidia (NVDA -1.02%), as it makes billions by designing the hardware needed to run and train these advanced algorithms. However, in recent times, the company has run into challenges as Chinese competition and international trade disputes weigh on investor optimism. Nvidia's shares are currently down by roughly 10% from an all-time high of $149 reached in January. But is this dip a buying opportunity or a signal for investors to stay far away? The company's first-quarter earnings report expected on May 28 will give us important clues about what the future might bring. It will take a lot to impress investors The hardest part about being a winner is that everyone expects you to keep winning. Expectations are high, and it's easy to see why. In the fiscal fourth quarter, Nvidia's revenue surged by 78% year over year to $39.3 billion, driven by strong demand for its new Blackwell graphics processing units (GPUs) designed to maximize the training speed of AI models. New product releases are a significant growth engine because, despite their high price tags (Blackwell chips are estimated to cost between $30,000 and $40,000 per unit), customers are still willing to shell out because better hardware can help them make money by allowing them to run greater workloads more efficiently and save on energy costs. Nvidia has leveraged its dominant market position to earn huge margins. Fourth-quarter profits surged 73% to $22.1 billion. However, while Nvidia's past performance is excellent, this level of growth might not last forever as the company begins running into increasingly challenging comps. Nevertheless, management remains optimistic for the future, guiding for first-quarter revenue of $43 billion (plus or minus 2%), which would exceed analyst expectations of $41.8 billion and represent a jump of 62% compared to the prior-year period. What are some of the long-term challenges? Despite management's optimism, Nvidia is not without long-term challenges. The company's guidance was released in late February before the Trump administration unleashed its "reciprocal tariff" policy, which has created significant uncertainty in global markets. Perhaps more importantly, guidance may not account for Nvidia's challenges in China. According to CEO Jensen Huang, the Trump administration's ban on sales of its H20 chips to China could eventually cost up to $15 billion in sales. And Nvidia expects a $5.5 billion impairment charge in the first quarter to write down inventory and failed purchase commitments related to the product. With this in mind, Nvidia's first-quarter results may fall on the lower side of guidance or come in lower than expected. Over the long term, Nvidia remains committed to the Chinese market, which Huang believes represents a $50 billion annual opportunity. According to Reuters, the company plans to release a downgraded version of its H20 in China over the next few months. The company has also opened a research and development lab in Shanghai to stay competitive. This is a smart move as Chinese rivals such as Huawei take advantage of Nvidia's regulatory challenges to possibly chip away at its market share with AI chips of their own. Is Nvidia a buy before May 28? With a forward price-to-earnings multiple of 31, Nvidia goes into first-quarter earnings with a slight premium over the S&P 500 average of 24. This valuation is relatively affordable, considering the company's strong growth rate and the continued excitement about the AI industry. That said, Nvidia faces some serious risks to the viability of its China business, and investors may want to wait until first-quarter earnings shed more light on the situation before considering a position in the stock.

BofA maintains NVIDIA stock Buy rating and $160 price target By Investing.com

On Tuesday, BofA Securities expressed continued confidence in NVIDIA Corporation (NASDAQ:NVDA), maintaining a Buy rating and a $160.00 price target for the stock. The $3.2 trillion market cap company, which boasts a perfect Piotroski Score of 9 according to InvestingPro, has demonstrated remarkable financial strength with 114.2% revenue growth over the last twelve months. The endorsement follows an updated first-quarter preview by BofA analyst Vivek Arya, who took into account recent supply chain discussions, investor conversations, and NVIDIA's commentary at the recent Computex tradeshow. Arya highlighted a discrepancy between NVIDIA's reported $15 billion in lost sales in China due to the U.S. government's ban on H20 sales to the country, and the more modest $10-$12 billion revised sales expectations for fiscal year 2026/calendar year 2025 by analysts and investors. Additionally, consensus revisions have lowered expectations even further to $3.8 billion. Arya noted that this gap could widen, potentially creating a $4-$5 billion headwind in the second fiscal quarter, depending on the original timing of NVIDIA's shipments to China. The analyst is also looking for signs of confidence from NVIDIA's management regarding a recovery in gross margins (GM) back to the target mid-70s percentage range in the second half of the year, compared to a consensus of 73%/74% in the third and fourth fiscal quarters. Notably, InvestingPro data shows NVIDIA's current gross profit margin stands at 75%, suggesting the company is already operating within its target range. This would be indicative of strong demand and successful execution of rack-level product yields by the company's Blackwell division. Despite the near-term challenges, BofA Securities remains bullish on NVIDIA, citing the company's strategic position in the global AI deployment cycle. With analyst consensus targets ranging from $100 to $220 per share, and an overall "Strong Buy" recommendation according to InvestingPro, which offers 18 additional key insights about NVIDIA's valuation and growth prospects in its comprehensive Pro Research Report, the market appears to share this optimism. Arya also suggested that there could be a potential recovery in China sales later in the year with the introduction of new redesigned and compliant products. In other recent news, NVIDIA is set to release its first-quarter fiscal 2025 earnings, with analysts from Stifel and Susquehanna maintaining a Buy rating and a Positive rating, respectively, both with a $180 price target. Stifel anticipates NVIDIA's results and outlook will align with expectations, despite potential revenue impacts from H20 restrictions. Susquehanna's Christopher Rolland noted that these restrictions affected $1 billion in sales, leading to a revised forecast of $186 billion in total company revenue for FY26. Meanwhile, DA Davidson reaffirmed a Buy rating for Amazon (NASDAQ:AMZN), with a $230 price target, highlighting the deployment of Anthropic's Claude 4 model on Amazon's Trainium chips as a positive development for Amazon Web Services. Additionally, cryptocurrency exchange Kraken announced plans to offer tokenized equities, allowing non-US customers to trade stocks like NVIDIA and Amazon as tokens. This move aims to simplify access to US stocks for international investors by enabling 24/7 trading. Despite some challenges, analysts remain optimistic about NVIDIA's future, with expectations of increased gross margins and strong AI demand. The gaming sector is also projected to see growth, driven by easing supply constraints and rising GPU prices. Overall, these developments reflect significant opportunities and strategic moves for both NVIDIA and Amazon in the evolving tech landscape.