Nvidia earnings come with a ‘high bar.’ What could matter for the stock.

Nvidia Corp. faces a high hurdle with its upcoming earnings — such that the company likely needs a big beat to satisfy Wall Street.

That’s according to Susquehanna analyst Christopher Rolland, who thinks “the bar has been raised” for Nvidia
NVDA,
-2.99%
to the point where the company needs to top revenue expectations by at least $1.5 billion when it posts results later Wednesday.

The FactSet consensus is for $20.4 billion in fiscal fourth-quarter revenue along with $4.59 in adjusted earnings per share. Revenue is expected to more than triple, while adjusted EPS is projected to climb by more than 400%.

“In short, we expect another strong print but think investors have largely priced in this near-term upside, with size of the beat the real debatable point,” Rolland wrote last week. Nvidia’s stock has risen nearly 40% since the company last posted results, contributing to “a high bar for execution.”

Nvidia’s upcoming report will cap off fiscal 2024, and investor attention will move to expectations for the new fiscal year. Rolland, for his part, thinks the chip giant could rake in $99 billion in revenue for the period, above the FactSet consensus, which is for $95.4 billion, but “perhaps closer to the whisper number” anticipated by the buy side.

The company will host its annual GTC developer conference next month, which could be a stock catalyst. Wall Street is also looking ahead to the launch of the company’s B100 chip, expected later this year. For that reason, there’s interest in whether anticipation for that B100 has dampened demand for current offerings at all.

“While some worried about an air pocket ahead of B100, we think this seems increasingly less likely,” though Rolland acknowledged the possibility of a third-quarter growth slowdown as the company prepares to ramp that product around the end of the year.

He and his team “believe H100s generally have been allocated to NVDA’s largest customers, while the long-tail list has yet to receive ample supply…giving us confidence in [first-quarter] guidance.”

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In thinking about the latest quarter and upcoming outlook, Morgan Stanley’s Joseph Moore added that “data points are mixed” but those “closest to end demand seem strongest, and more mixed supply chain
data has more to do with non [graphics-processing-unit] bottlenecks, or the upcoming product cycle transitions from H100 to H200 and B100.”

He noted that some on the sell side appear to think Nvidia could give top-line guidance for the current quarter of at least $25 billion, but in his view, “while it’s possible revenues could get there, we see the company guiding more conservatively than that at least initially.”

Moore and his team “aren’t looking for an immediate strong
reaction to positive results,” though they also don’t anticipate a selloff.

Wedbush’s Matt Bryson added that “the only question around [Nvidia’s] near-term performance and outlook” was “to what magnitude results and guidance will exceed our (and consensus estimates).”

Read: Stocks owned by Nvidia saw surge in bullish bets days before filing sparked massive rally

For context, Nvidia topped revenue expectations by nearly $2 billion with its October-quarter results, while delivering roughly 19% upside on adjusted EPS. Even that wasn’t enough to drive a positive move in the stock the day after those results, as the stock fell 2.5%.

From Bryson’s vantage point, though, there’s been “no slowing in AI-infrastructure spending momentum” as the largest data-center operators all seem intent to lift capital expenditures this year, mainly due to AI investments.

While Nvidia shares are up 225% over the past year, the stock has sold off across these past two sessions, perhaps reflective of the high expectations heading into the report.

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