Nvidia Earnings Preview: Street Sticks with AI Giant Despite Market Headwinds

Despite recent concerns over DeepSeek's competitive AI offerings, Wall Street remains bullish on Nvidia (NVDA) ahead of its upcoming earnings report. This optimism is driven by strong capital expenditure forecasts from hyperscalers such as Amazon (AMZN) and Meta (META), indicating continued demand for AI infrastructure.

Caution Signs

However, some caution is warranted as Nvidia's first-quarter earnings per share (EPS) trend has slightly declined over the past month. Additionally, analysts have not revised their 2025 EPS estimates in over 60 days.

Valuation

Nvidia is currently trading at a forward price-to-earnings (PE) multiple of 32, making it one of the most attractive AI stocks in terms of valuation. This compares favorably to peers like Broadcom (AVGO) and Marvell Technology (MRVL), which trade at 35 times and 41 times, respectively.

Analyst Sentiment

Ahead of the earnings report, analysts remain largely positive on Nvidia:

* HSBC's Ryan Mellor maintains a Buy rating with a price target of $175, highlighting the strong demand outlook for AI GPUs.
* Keybanc Capital Markets' John Vinh reiterates Overweight with a raised price target of $190, emphasizing the offsetting benefits of manufacturing constraints and increased demand from China.
* Loop Capital's Ananda Baruah retains a Buy rating and $175 price target, emphasizing Nvidia's potential growth in the accelerated compute and Generative AI markets.
* Bank of America's Vivek Arya sustains a Buy rating and $190 price target, expecting a modest fourth-quarter beat but headwinds in the first quarter.
* Evercore ISI's Mark Lipacis keeps an Outperform rating and $190 price target, acknowledging Nvidia's leading position in the hyperscaler market.

Key Points

* Despite DeepSeek's challenge, hyperscalers are increasing AI infrastructure investments.
* Nvidia's valuation remains attractive compared to its peers.
* Analysts expect positive results but acknowledge potential challenges in the first quarter.
* Nvidia's leadership in AI and its expanding total addressable market are long-term growth drivers.