Nvidia’s stock has continued to gain traction ahead of Wednesday’s earnings report. On Tuesday’s session, the stock ended nearly 5% higher, as investors clearly priced in what is expected to be a rather monstrous beat.

Judging by past quarters, this does appear to be the case. However, the level of euphoria right now around the AI trade is quite daunting for many investors, who may view these current levels as likely unsustainable. The thinking goes that Nvidia’s growth will have to slow at some point (trees don’t grow to the sky, and prices can’t increase forever). But some investors and analysts are content with taking the opposite side of this bet, and there’s reason to do so.

EMJ Capital’s Eric Jackson predicting Nvidia stock could double within a year due to its AI chip dominance and market positioning. Jackson emphasized growing AI investments and long-term demand for Nvidia’s technology as key fundamental drivers underpinning such a move. These factors are hard to disagree with, and until we see something that’s not to like with this company, I do think this will remain the ongoing narrative around Nvidia.

The company did see previous dips tied to U.S. export restrictions to China, and worries about how a potential tariff war may impact the stock going forward. But if the AI GPU demand trend continues as expected, there’s every reason in the world to believe that analysts will be correct in their assumption that growth is more likely than not to accelerate from here.

Let’s look at the bullish argument behind why Nvidia stock may soar following this earnings report on Wednesday.

Key Points About This Article:

• Nvidia’s dominant market position in the world of high-performance computing chips positions the company as a top growth stock in this market.
• The company’s upcoming earnings report will shed light on how the company’s growth prospects look moving forward, and could be a big upside catalyst for this stock.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

What to Know About the Upcoming Earnings Report

Nvidia’s fiscal Q3 sales and profits are projected to rise 83% year-over-year, with most Wall Street analysts showing strong support for a potential reported growth rate that comes in even more rosy than these projections. In fact, of the 63 analysts analysts covering this stock, 59 rated Nvidia as a buy or strong buy, with a consensus $160.38 price target implying roughly 11% upside from Tuesday’s levels. 

I’m of the mind that more price target increases are likely to materialize following this earnings report. That is, if Nvidia does its “beat-and-raise” thing again, which has become commonplace in recent years.

There’s no indication to believe the company won’t, with Jensen Huang’s previous comments around “insane demand” for the company’s Blackwell chips providing the latest growth catalyst investors will watch closely.

Positive cloud bookings and rising capital expenditures from hyperscalers could provide the next catalyst for growth, at least according to Evercore ISI’s Mark Lipacis. Other analysts such as Eric Jackson believe the company’s including to the Dow Jones Industrial average could attract more retail investors, though risks tied to chip sales restrictions in China remain. And Bank of America analyst Vivek Arya suggests that Nvidia’s revenue potential may be underestimated, at least in reference to the company’s Blackwell Ultra, Rubin and Rubin Ultra chips, which are expected to launch in Q3 2025.

I’ll be looking for commentary on all of the above factors in this upcoming report and earnings call.

Blackwell Chip Issues

Interestingly, it’s not all roses for Nvidia heading into this earnings report, despite where the stock is headed into the call. Nvidia’s stock dropped 1.3% Monday after reports of overheating issues with its Blackwell processors in high-capacity server racks began circulating in the market. These reports indicated that the Blackwell processors have undergone repeated design changes in addition to these overheating concerns. These factors have led some analysts to become concerned about customers potentially pulling back amid installation delays.

We’ll have to see what the company has to say about these reports, and whether or not these issues will be substantiated or not. So far, the company has stated that any adjustments made to these chips are standard, and are made in conjunction with the input from various cloud providers.

Wedbush analyst Matt Bryson noted server designs were being finalized last month, but doubted significant NVL72 delays from cooling issues. He plans to address the topic at SC24, a high-performance computing conference in Atlanta. Blackwell’s launch had already faced delays due to a design flaw affecting production, per previous reports. 

The company announced its Blackwell chips in March, initially planned for Q2 shipment, but delays could impact customers like Meta, Google, and Microsoft. I’ll be watching closely for any additional color on how the Blackwell rollout is going, and if these issues may be a bigger concern than the market is making them out to be. 

Price Targets Are Heading Higher

Despite these issues, most analysts and tech experts do expect to see continued AI growth translate into increased capital spending on GPUs. The company’s AI chips continue to see advancements which should drive continued performance gains over time. And while these gains may slow, Nvidia’s market share is likely to remain intact and its ability to continue to raise prices as performance metrics improve increases as well.

As a result of these factors, a range of analysts have raised their price targets on Nvidia stock heading into this earnings call. Mizuho raised Nvidia’s price target to $165, citing strong AI accelerator momentum and expected January quarter guidance aligning with forecasts. Analyst Vijay Rakesh highlighted benefits from GB200 and GB300 rollouts, with sovereign market expansion in 2025 potentially adding $10 billion to data center revenue.

Rakesh also underscored a $400 billion AI server market with projected 60% growth from 2023 to 2027. Nvidia’s Q2 declines, which were tied to Blackwell delays from GPU mask changes, were largely expected and likely didn’t impact the chip’s functionality or growth outlook. Nvidia remains positioned for significant data center-driven growth amid the AI boom. Indeed, CEO Jensen Huang estimated annual data center infrastructure spending at $250 billion, potentially reaching $1-2 trillion by 2030. Bank of America’s Vivek Arya echoed this sentiment, citing global investments in AI infrastructure as a key driver.

Nvidia May Be Worth Buying Heading Into Earnings

I’m of the view that Nvidia remains the preeminent way for investors to play the AI trend. The company’s Blackwell chips are set for a successful launch, despite initial fabrication concerns that caused minor delays. The chips, an upgrade from the high-performing Hopper series, remain in high demand, with xAI purchasing 150,000 Hopper units recently. Nvidia is reportedly sold out of Blackwell for a year post-launch, with CEO Jensen Huang describing demand as “insane.” To address this, Nvidia partnered with Foxconn to open a Blackwell-specific fabrication plant in Mexico.

Moreover, Nvidia’s robust free cash flow (FCF) far surpasses AMD’s, providing it with substantial resources to strengthen market dominance. Nvidia uses its FCF for R&D, talent acquisition, and shareholder enrichment through stock buybacks, repurchasing $15.1 billion in shares this year and approving an additional $50 billion. Investors await updates on these buybacks in Wednesday’s report, underscoring Nvidia’s commitment to shareholder rewards.

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