Following Nvidia's (NVDA, Financial) previous earnings report, Wall Street speculated that the company's performance might not significantly exceed expectations as it had in recent quarters. However, Cantor Fitzgerald analyst C.J. Muse believes Nvidia holds significant potential to outperform in the chip industry. Muse and his team see Nvidia as having the greatest "upside potential" among the companies they cover.
The anticipated driver of Nvidia's potential outperformance is the upcoming launch of its Blackwell chip, expected to contribute significantly to the company’s revenue in the January quarter. Nvidia estimates that the Blackwell line could generate "billions of dollars" in revenue, with Wall Street forecasts around $4 billion. According to Nvidia CEO Jensen Huang, demand for Blackwell is "insane," and coupled with the company's strong execution, Muse predicts Nvidia could surpass expectations.
Muse forecasts Nvidia's January quarter revenue to reach approximately $37 billion and April quarter revenue about $41 billion, each exceeding market consensus by roughly $1 billion. He points out that Blackwell's performance could drive earnings beyond expectations and alleviate concerns about any short-term volatility, marking it as potentially the company's "strongest and most important product cycle" to date. In this context, Muse expresses strong optimism about Nvidia’s prospects.
Nvidia’s stock surged again, closing up 4.04% at $132.884, marking its fifth consecutive day of gains. The stock is now just 2.3% below its all-time high closing price of $135.58 set on June 18. Mizuho analyst Jordan Klein noted growing interest in Nvidia’s stock from long-term and hedge fund investors, particularly in light of early 2025 prospects. The Blackwell chip is expected to drive substantial outperformance due to its demand significantly outpacing supply.
Klein also highlighted comments from artificial intelligence server contract manufacturer Foxconn, which recently emphasized the strong demand for the Blackwell chip, further boosting market optimism.
