Market on edge: Nvidia stock outlook: AI demand and new products fuel growth as key earnings report approaches

Market on edge: Nvidia stock outlook: AI demand and new products fuel growth as key earnings report approaches

Equities 10 minutes to read
Koen Hoorelbeke

Investment and Options Strategist

Market on edge: Nvidia stock outlook: AI demand and new products fuel growth as key earnings report approaches


Introduction

NVIDIA (NASDAQ: NVDA) has been one of 2024’s standout stocks, with a 193% year-to-date gain driven by its leadership in AI and data center hardware. Trading near a record high of $145.26, the stock reflects investor enthusiasm for NVIDIA’s position in AI. However, with high expectations already priced in, the upcoming earnings report on November 20 will be crucial for maintaining this momentum.


Valuation: strong fundamentals at a premium

Nvidia’s profitability supports its premium valuation. With a gross margin of 72.72% and operating margin of 54.12%, the company demonstrates efficient operations in high-demand markets. Still, its trailing p/e of 68.20 and forward p/e of 38.8x signal elevated growth expectations, making the stock vulnerable to any disappointment in earnings or guidance. Wall Street remains mostly bullish, with an average price target of $153.63. However, with the stock price already close to this target, some analysts see limited short-term upside without strong Q3 results.


Analyst sentiment: Blackwell launch drives growth optimism

Analysts continue to view Nvidia favorably, especially with the upcoming Blackwell chip launch. Piper Sandler recently increased its price target to $175, citing Nvidia’s potential to capture a large share of the $70 billion ai accelerator market by 2025. UBS, raising its target to $185, expects Q3 revenue in the $34.5 billion to $35 billion range, above the $32.96 billion consensus. They also expect Q4 revenue guidance around $37 billion, bolstered by sovereign ai investments, which could add $10 billion in 2024.


Q3 earnings preview: high expectations for growth

For Q3, Nvidia is projected to report adjusted EPS of $0.70 and revenue of $32.96 billion (FactSet consensus). UBS’s higher forecast of $34.5 billion to $35 billion reflects strong confidence in Nvidia’s ability to outperform, especially in data center sales. Analysts like Jefferies expect Nvidia-powered servers to account for 66% of data center demand by 2025-26, underscoring Nvidia’s growing dominance in ai infrastructure.


Risks: valuation, supply constraints, and competition

Despite a positive outlook, Nvidia’s high valuation presents risks. A forward p/e of 38.8x leaves little room for error, making the stock sensitive to any signs of slowing demand. Morgan Stanley analyst Joe Moore has flagged limited chip supply as a short-term risk, which could constrain Nvidia’s growth temporarily. Competition is also heating up. Amazon’s Trainium 2 chips are expected to launch soon, with AMD and Broadcom stepping up their presence in ai hardware. This increased competition could impact Nvidia’s market share and pricing power over time.


Conclusion

Nvidia’s November 20 earnings report is pivotal for justifying its premium valuation. Analysts remain optimistic, with strong demand for ai chips and the Blackwell launch driving growth expectations. However, high valuation, supply constraints, and increasing competition introduce potential risks. For growth-oriented investors, Nvidia remains a compelling ai play, but maintaining momentum will require continued innovation and effective supply management.

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

Content disclaimer

The information on or via the website is provided to you by Saxo Bank (Switzerland) Ltd. (“Saxo Bank”) for educational and information purposes only. The information should not be construed as an offer or recommendation to enter into any transaction or any particular service, nor should the contents be construed as advice of any other kind, for example of a tax or legal nature.

All trading carries risk. Loses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money.

Saxo Bank does not guarantee the accuracy, completeness, or usefulness of any information provided and shall not be responsible for any errors or omissions or for any losses or damages resulting from the use of such information.

The content of this website represents marketing material and is not the result of financial analysis or research. It has therefore has not been prepared in accordance with directives designed to promote the independence of financial/investment research and is not subject to any prohibition on dealing ahead of the dissemination of financial/investment research.

Please refer to our full disclaimer and notification on non-independent investment research for more details.
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-ch/legal/disclaimer/saxo-disclaimer)

Saxo Bank (Schweiz) AG
The Circle 38
CH-8058
Zürich-Flughafen
Switzerland

Contact Saxo

Select region

Switzerland
Switzerland

All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) Ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law. 

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.