Chipmaker Nvidia (NVDA) is set to report fourth-quarter earnings results on Wednesday, February 21. Stifel currently holds the Magnificent Seven tech stock component at a Buy rating with an $865 per share price target.
Stifel Applied Technology Analyst Ruben Roy examines several of the top drivers expected to weigh on Nvidia earnings, including AI infrastructure and CPU product pipelines.
“It’s an unlikely situation where we see sort of a miss and guide lower, but anything could happen, and certainly that would be taken as a meaningful negative, I would say, into the ecosystem of AI as we think about the broader companies that are involved here,” Roy tells Yahoo Finance. “Throughout earnings season, the news has been rather positive on this broadening of capital spending into a lot of other companies that will benefit from AI infrastructure.”
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor’s note: This article was written by Luke Carberry Mogan.
Video Transcript
BRAD SMITH: If NVIDIA comes out and misses on this, what is potentially, a Goldilocks report, is that the rug pull on the broader markets, especially given how AI has fueled this rally?
RUBEN ROY: That would be tough because, there’s, obviously, a lot of expectations here. One of the things that we’ve been talking about with our tech team here at Stifel has been this concept of broadening of AI infrastructure spend. And we are starting to see that with things like AI networking. Companies that are exposed to interconnecting these GPU clusters, and then out into the rest of the data center and rest of the world.
And those numbers have been going up, Brad. So I think it’s an unlikely situation where we see a miss and got lower. But anything can happen. Certainly, that would be taken as a pretty meaningful negative, I would say, into the ecosystem of AI, as we think about the broader companies that are involved here.
But like I said, throughout earnings season, the news has been rather positive on this broadening of capital spending into a lot of other companies that will benefit from AI infrastructure
SEANA SMITH: Ruben, you mentioned just a moment ago that GPU tech conference that’s coming up next month, any idea– just give us a sense just about what you think the pipeline updates is going to sound like or is going to look like, and what you think NVIDIA sees in terms of that growth opportunity, the TAM, the total addressable market, here for their chips in the longer term.
RUBEN ROY: Yeah. It’s a great question because I think that’s really a focus area that we’ve been looking at, which is that NVIDIA is expanding their technologies that are coming into this area of spend. So not just the GPU hardware, not just the software that goes along with it or the networking products that are very necessary, but they’re expanding. They started shipping a CPU for the first time into these types of deployments.
So they’ve got an ARM-based CPU. I think that the cadence of their technology coming to market is increasing. So instead of GPUs coming to market every two years, they’re trying to increase that to potentially bring out new technologies every year.
They’ve got, as you folks might know, H100 and H200 are the leading edge of the GPUs that are going out into these AI infrastructure builds. Today, they’ve got a new set of technologies coming out that we expect to be launched later on this year, which we’ll probably talk about.
And so I think it’s really that it’s a question of expanding their technology that they’re bringing to the table across both hardware and software, as well as the networking. And so I think that’s going to be an important area for investors to focus on.
