Analysts See Buying Opportunity in NVIDIA Before Earnings
Analysts say NVIDIA (NASDAQ: NVDA) is a buy ahead of earnings because the results will be robust, high-double-digit growth is likely, and the guidance will also be sound. The long-term outlook is also robust because the semiconductor company has been investing in its full stack of AI products and services. The company is leaning into an increasingly specialized group of products that will underpin AI growth and advancement across industries and verticals.
The analyst activity leading into the release is mixed, including a couple of price target reductions, but overall, it is bullish and leading the market higher. The sentiment is firm at a Moderate Buy with a bullish bias due to the high number of Buy or higher ratings, about 85%, and the price target trend.
The consensus price target reported by MarketBeat trended steadily higher in 2024 and set new highs in 2025, suggesting a 20% upside relative to mid-February price action and another 30% at the high end. The high-end target of $220 was first set by Rosenblatt Securities in early January and then matched by Tigress Financial late in the month. Tigress Financials' target is the most recent target on record, compounded by an upgrade to Strong Buy from Buy. Assuming NVIDIA provides another good report, these trends should continue.
Analysts from Evercore ISI added the stock to their Tactical Outperform list, citing the company’s market-leading technology. In their view, NVIDIA is still five to ten years ahead of the competition and the #1 choice for hyperscalers such as Google (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), Oracle (NYSE: ORCL), and Meta Platforms (NASDAQ: META). Evercore ISI rates NVIDIA at Outperform with a $190 price target, 13% above the consensus.
NVIDIA Growth Slows in 2025: So What? It's Growing and Has Lots of Cash
NVIDIA’s growth is slowing in 2025 and is expected to continue slowing as the year progresses, but it doesn’t matter. Trading over 40x earnings in 2025, it is valued at roughly 15x earnings compared to 2034, and the forecasts are likely low. The company has outperformed the consensus revenue estimates reported by MarketBeat 100% of the time since before 2020 and the earnings estimates since 2023. Revenue growth will be sustained at a high-double-digit pace in 2025 and 2026, then slow to a more sustainable low-teen CAGR in the future.
Critical takeaways for 2025 are that FQ4 results, due in February, will be up 8% or more sequentially, 72% compared to the prior year, and more than 800% compared to 2020. Growth is expected to continue for at least another decade. Earnings are also central because the company has amassed significant earnings leverage and cash. At the end of FQ3, the balance sheet highlights a nearly 50% increase in cash and double-digit increases in receivables, inventory, and current and total assets. Total assets are up almost 50% and only partially offset by increased liability. Equity is up 50%, and leverage is low. The $38.5 billion is more than total liability, leaving the company in a net cash position.
The net cash position and balance are critical because of the potential for capital returns. The company already pays dividends and buys shares but in token amounts. The balance sheet can sustain more aggressive capital returns because of the cash flow and growth outlook and may be announced in 2025. Until then, the dividend is worth less than 0.10% in yield but growing at a high-double-digit CAGR, and repurchases reduced the share count by 0.4% in the first three months of the fiscal year.
NVIDIA Rebounds, New Highs Are in Sight
NVIDIA’s share price hit a four-month low in late January following the Deepseek news, but the rebound is already underway. The stock is up 20% since hitting the low, and the market is set up to move higher. Overbought conditions in the MACD and stochastic have been relieved, showing early signs of a trend-following signal. The critical resistance is at the current all-time high, which will likely be tested before or concurrent with the earnings report. If the market moves to new highs, it will likely continue advancing by $35 to $50 to align with the high-end range of analysts' targets.
