Nvidia: Preparing For Blockbuster Earnings Amid ASIC Fears

Summary

• Nvidia Corporation is poised for blockbuster earnings, with a Buy rating and a $245 price target reiterated ahead of its report.

• Hyperscaler capex is surging, yet NVDA's stock lags due to investor fears of custom ASIC competition and perceived cycle peaking.

• NVDA's competitive edge lies in performance, supply chain, and TSMC capacity, with gross margins expected to rebound to 75%.

• NVDA stock valuation is at a three-year low, setting up for a potential rerating if NVDA delivers on revenue growth, margins, and bullish guidance.

It seems so long ago when every press release mentioning AI or ChatGPT pushed Nvidia Corporation's (NVDA) stock to new highs, making it the world's most valuable company.

In recent months, the AI trade has become more cautious and dispersed, with software stocks plunging and hyperscaler names in significant drawdowns.

Amid this volatility and uncertainty, a giant is hiding in plain sight, and that giant is Nvidia, which I expect to deliver blockbuster earnings this Wednesday.

I reiterate a Buy rating ahead of the print, expecting a major injection of confidence to skeptical investors.

Nvidia's Stock Barely Responded To Major Escalation In Hyperscaler Capex Spending

The fourth quarter earnings season was a capex festival for Nvidia's biggest customers. Virtually all hyperscalers came out with capital spending plans that were much higher than initial estimates.

For 2026, Amazon (AMZN) is looking at $200 billion, Alphabet (GOOG) at $185 billion, Meta Platforms (META) at $125 billion, and Microsoft (MSFT) is run rating to $150 billion. This doesn't include Oracle (ORCL) and the neoclouds, which stand to spend over a hundred billion dollars combined as well.