Wall Street estimates for Nvidia's fiscal first-quarter earnings have fallen sharply in the past week. Meanwhile, Nvidia stock has traded in a tight range ahead of the AI chipmaker's fiscal Q1 report, due late Wednesday.
Analysts polled by FactSet expect Nvidia to earn an adjusted 73 cents a share on sales of $43.34 billion for the quarter ended April 27. A week ago, Wall Street was modeling earnings of 88 cents a share on $43.3 billion.
Nvidia has warned that it will take a charge of "up to approximately $5.5 billion" for H20 inventory that the company was blocked from selling to China in April. The size of the actual Q1 charge will be a focus area of Nvidia's report.
An even bigger focus area is the artificial intelligence leader's sales guidance for its fiscal second quarter.
"Investors are quite concerned about the July (quarter) revenue guide being below expectations," Mizuho Securities trading-desk analyst Jordan Klein said in a client note Tuesday.
There is "a lot of noise" about revenue lost due to the H20 sales ban, he said. Most estimates have Nvidia losing $5 billion in revenue per quarter from the ban, "but some think it could be as high as $8 billion" a quarter, Klein said.
Nvidia's fiscal second-quarter revenue guide could be in the low $40 billion range vs. the current consensus estimate of $45.92 billion, Klein said.
Meanwhile, Reuters reported Monday that Nvidia plans to begin production as early as June of a new AI chip set for China that it hopes will be permitted for sale. The throttled processor will use conventional GDDR7 memory instead of more advanced high-bandwidth memory (HBM), Reuters said.
Nvidia Stock Nears Buy Point
On the stock market today, Nvidia stock rose 3.2% to close at 135.50.
Nvidia stock is in a cup-with-handle base at a buy point of 137.40, based on IBD analysis. That base is within a larger consolidation pattern with a buy point of 153.13, according to IBD MarketSurge charts.
The Nvidia earnings report will be closely watched as a barometer for the AI infrastructure market.
"There is no company in the world more important to the markets and global investor sentiment than Nvidia with the Street laser focused tomorrow after the bell when we hear April (quarter) results/guidance from the Godfather of AI Jensen," Wedbush Securities analyst Daniel Ives said in a client note Tuesday, referring to Nvidia Chief Executive Jensen Huang.
"We believe overall AI chip demand around Blackwell continues to significantly outstrip supply," Ives said. "The big question for tomorrow is what type of dent has the Trump H20/China business played in Nvidia's global demand and outlook going forward."
Possibly 'Stale' Street Numbers
Sell-side analysts haven't fully modeled in the impact of the H20 sales ban into their estimates, Morgan Stanley analyst Joseph Moore said in a client note. Therefore, he sees some downside potential with Nvidia's fiscal Q1 report because of "stale" consensus numbers.
Moore kept his overweight rating on Nvidia stock with a price target of 160.
Last Wave Of Negative News?
Piper Sandler analyst Harsh Kumar on Tuesday reiterated his overweight rating on Nvidia stock with a price target of 150.
In a client note, Kumar said he expects Nvidia to miss the consensus revenue target because of the H20 ban and macroeconomic uncertainty. But he is bullish on its prospects for the second half of the year based on ramping capex investments by hyperscale cloud computing companies and new sovereign AI initiatives.
"We advise investors to weather the uncertainty and stay long the stock as this is likely largely the last wave of negative news for Nvidia this year," Kumar said.
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