QV Alert – Buy Nvidia Ahead Of Earnings

Let us look at what is happening at Nvidia courtesy of an investment service called The Motley Fool.

Nvidia’s H100 graphics processor (GPU) was the hottest AI data centre chip in the world during 2023, helping the company capture an incredible 98pc market share. It remains a top seller but it was superseded by the H200, and then an entirely new generation of GPUs based on Nvidia’s Blackwell architecture.

The Blackwell-based GB200 NVL72 system can perform AI inference at 30 times the pace of the equivalent H100 system, paving the way for developers to deploy the most advanced AI models to date. Nvidia CEO Jensen Huang told investors demand was “insane” shortly after Blackwell’s broad release at the end of 2024, and from what we know so far, sales are living up to expectations.

However, the DeepSeek saga rocked Wall Street’s confidence in January. The Chinese start-up revealed it spent just $5.6m to train its V3 AI model, yet it matches the performance of some of the best models from American start-ups like OpenAI, which have invested tens of billions of dollars to reach this point. Moreover, DeepSeek used older generations of Nvidia’s GPUs, which left investors wondering whether AI developers really need the latest and greatest Blackwell chips.

But some of those concerns have since been put to bed by Nvidia’s largest customers. Meta Platforms CEO Mark Zuckerberg thinks a drop in training workloads will be offset by inference workloads, which are now consuming an increasing amount of computing power because newer AI models spend more time “thinking” (which is known as test-time scaling). Meta expects to spend up to $65bn on AI data centre infrastructure during 2025, up from $39.2bn last year, so it certainly isn’t pulling back.

Alphabet also plans to significantly increase its hardware investments this year, forecasting a record $75bn in capital expenditures (capex). Then there is Amazon, which recently told investors it could spend over $100bn in 2025 to build more AI infrastructure.

If all of Nvidia’s top customers are significantly increasing their investments in chips and data centres, it’s hard to envision a scenario where the company’s financial results disappoint. Wall Street’s consensus forecast (provided by Yahoo! Finance) suggests Nvidia’s fourth-quarter revenue will come in at $38.1bn, which is even higher than the company’s own estimate of $37.5bn.

If previous quarters are anything to go by, around 88pc of that revenue will come from the data centre segment, led by GPU sales.

The Q4 result would take Nvidia’s total fiscal 2025 revenue to a record $129.3bn, representing 112pc growth compared to fiscal 2024. But the company’s outlook for the future is also something Wall Street will be watching closely. Analysts are currently forecasting nearly $42bn in revenue for Nvidia’s fiscal 2026 first quarter, so if management’s guidance tops that number, it will be a great sign that DeepSeek concerns are mostly overblown.

When Nvidia reported its last set of results for the third quarter on Nov. 20, its stock fell by 7pc over the next five days or so. Short-term fluctuations in any stock are mostly just noise, and Nvidia had recovered almost completely just two weeks later. It speaks to the importance of maintaining a long-term view, especially with an opportunity like AI, which is likely to unfold over a period of years, not weeks or months.

The recent DeepSeek-related dip in Nvidia stock has created an enticing opportunity for investors. The stock currently trades at a price-to-earnings (P/E) ratio of 51.1, which is a 13pc discount to its 10-year average P/E ratio of 59.2.

Plus, Wall Street expects Nvidia to deliver $4.44 in earnings per share during the current fiscal year 2026, placing its stock at a forward P/E ratio of just 29.2.

In other words, assuming Wall Street’s numbers prove to be accurate, Nvidia stock would have to soar by 102pc this year just for its P/E ratio to trade in line with its 10-year average.

If Nvidia’s Q4 report adds further evidence that DeepSeek-related developments aren’t hurting demand for GPUs, its stock is likely destined for new record highs over the next few months. Considering the recent commentary and capex forecasts from the company’s biggest customers, I think the upcoming report on Feb. 26 is far more likely to deliver a positive surprise than a negative one.

The Motley Fool, Anthony de Pizio, 12 February 2025

Nvidia may be the greatest technology business the world has ever seen. The shares are a buy, before and after the results, anytime.

So which is the world’s second-greatest technology stock? No prizes for guessing what I think.

The shares are overbought which may create short-term volatility but great shares enjoying their day in the sun can stay overbought for years.

I have been rereading Alex Karp’s shareholders’ letter. Some of it is a bit too mystical for me but the opening sections must be among the most stunning in US corporate history.

We are still in the earliest stages, the beginning of the first act, of a revolution that will play out over years and decades.

Our total revenue in the fourth quarter last year reached a record $828m, representing a growth rate of 14pc from the prior quarter’s total of $726m, and 36pc from the same period the year before.

This is not an incremental advance or marginal acceleration of our business. This is a new phase.

And the momentum we are seeing across sectors, both commercial and government, is unlike anything that has come before.

The business we have built has now developed its own internal momentum and strength, its own interior life and forms of untamed organic growth, with the output that we are seeing far surpassing what we are investing.

A software juggernaut has indeed emerged. 

II.

We have the products and reach of an established incumbent and the speed, growth, and agility of an insurgent startup.

It is that most lethal of combinations that we have been seeking to build, and the future is now coming into sharp focus.

The strength of our commercial business in the United States, in particular, continues to astound even our most ardent believers.

Our U.S. revenue grew 52pc year-over-year to $558m in the last three months of 2024. And our U.S. business, at $1.9bn for the year, now accounts for 66pc of our total sales.

In the United States, commercial revenue alone in the fourth quarter grew 64pc year-over-year—and 20pc quarter-over-quarter—to $214pc.

Sales to our U.S. government partners, from intelligence services to healthcare work, grew 45pc year-over-year to $343m in the fourth quarter, pushing annual sales to $1.2bn.

III.

We have been preparing for this moment diligently for more than twenty years.

Palantir, shareholders’ letter, Q4 2024, 3 February 2025

Either Palantir is going to deliver explosive growth over the coming years or Karp is going to have to resign pursued by a deluge of shareholder actions for misrepresentation.

I have been crunching the numbers in my mind and I have a prediction for you. Revenue for full-year 2024 was $2.87bn. I believe that in the next three or four years, so conceivably for the full year 2027, revenue is going to reach $10bn. Even that will be well short of where this company and AI generally could be going. So I expect some time in 2027 Palantir will reach a value of $1 trillion, taking the shares to between $400 and $500.

My strategy for this share is to buy some now, buy more in the future and buy more after that but take care with the leverage. You do not want to be forced to sell when you should be buying more. I am trying hard to practice what I preach.