PRIMER: Nvidia (NVDA) earnings due 20th November at 16:20EST/21:20GMT

Analysis details (13:20)

COMMENTARY:

• Ahead of Nvidia’s earnings, Morgan Stanley is raising the numbers for H2’ 2025 but keep near term expectations in check. Overall, MS states that the current environment is completely supply constrained on Blackwell, and also partly on H200, and as such expect another very good quarter, but think the bigger upward revisions happen later in the year.


• MS thinks that the tech giant remains on track for "several billion" Blackwell revenue in January, but supply constraints remain, and also expect Hopper to grow modestly in January, as guided post October earnings. The bank adds the CEO comments that Blackwell demand is "insane" need to be understood in the context of those constraints. MS further notes that while demand signals show no signs of moderating, and while it's hard to calibrate exact amount of upside, they expect to maintain recent trends.


• Elsewhere, MS expect better GMs in October for the tech giant, but see that the initial Blackwell ramp will come at lower margins beginning in January. As a reminder, NVDA guided for 70bps of GM decline from 75.7% in July to 75.0% in October, however, MS thinks it seems conservative.


• On the stock, Nvidia remains MS’ Top Pick, and they view this as something of a transitional quarter, and thus not a major catalyst. Nonetheless, they remain OW/Top Pick given expectations that the Blackwell cycle will continue to drive meaningful upside through H2.


• Option Traders are pricing in a 9.9% move on earnings and the stock has averaged a 9.8% move in recent quarters.

KEY METRICS:

• EPS (exp. 0.74).


• Revenue (exp. 32.87bln).


• Gross profit margin (exp. 75.00%).


• R&D Expense (exp. 2.41bln).


• Free cash flow (exp. 16.19bln).

REVENUE BREAKDOWN EXPECTATIONS:

• Data centre (exp. 28.51bln).


• Gaming (exp. 3.05bln).


• Automotive (exp. 363mln).


• Professional Visualization (exp. 477mln).

Q4 FY25 GUIDANCE:

• EPS (exp. 0.82).


• Revenue (exp. 36.78bln).


• Data centre revenue (exp. 31.96bln).


• Gaming revenue (exp. 3.08bln).


• Automotive revenue (exp. 384mln).


• Professional Visualization revenue (exp. 500.50mln).


• Gross profit margin (exp. 73.5%).

FY25 GUIDANCE:

• EPS (exp. 2.85).


• Revenue (exp. 125.62bln).


• Data centre revenue (exp. 109.77bln).


• Gaming revenue (exp. 11.60bln).


• Automotive revenue (exp. 1.42bln).


• Professional Visualization revenue (exp. 1.85bln).


• Gross profit margin (exp. 75.45%).

CURRENT BROKER RECOMMENDATIONS:

• 
  Strong Buy: 21.


• 
  Buy: 36.


• 
  Hold: 6.

PRICING:

• 
  Current share price: 147.01.


• 
  Median share price target: 165.00.

20 Nov 2024 - 21:04- EquitiesResearch Sheet- Source: Newsquawk