Nvidia ($NVDA) is poised to deliver stronger-than-expected fiscal third-quarter results next week, bolstered by robust data center performance that is anticipated to act as a catalyst for the stock, as indicated in a recent note from UBS Securities. The brokerage revised its price target to $185 from $150 while reiterating a buy rating.
The company is scheduled to announce its earnings on November 20. Expected third-quarter revenue is projected within the $34.5 billion to $35 billion range, surpassing the consensus estimate of $32.97 billion, according to the research report. UBS forecasts data center revenue to reach $30.2 billion, reflecting a 15% quarter-over-quarter improvement, significantly above Wall Street's estimate of $28.9 billion. For non-GAAP earnings per share, UBS anticipates $0.78 for the quarter, compared to the consensus expectation of $0.74. "With investor expectations rising in recent weeks, we maintain an optimistic outlook and foresee Nvidia producing robust results and guidance that should propel the stock higher," commented analyst Timothy Arcuri. The brokerage also increased its fourth-quarter revenue target to $38.85 billion from $37.29 billion, significantly ahead of the consensus estimate of $36.55 billion.
Data center revenue is forecasted to grow by another 15% sequentially in the fourth quarter, expected to reach approximately $34.8 billion, surpassing street estimates. For the ongoing quarter, UBS raised its EPS target to $0.87 from $0.83, which is above the Street's expectation of $0.81. For the entire year, revenue is now projected at $129.27 billion, ascending from an earlier forecast of $127.71 billion, and significantly ahead of the street’s $125.71 billion estimate.
The fiscal 2025 adjusted EPS projection was also adjusted upward to $2.95 from $2.91. While gross margin presents a potential area of concern—with a possible decline of 200 basis points in the fiscal first quarter, landing in the 73% range—UBS notes that the capital expenditure backdrop for hyperscale environments is improving.
The anticipated gap between projected incremental hyperscale expenditure and Nvidia's incremental data center revenue for 2025 is expected to close over the next year. Current Price: 145.30, Change: -2.33, Percent Change: -1.58 $NVDA.