Chicago, IL – March 3, 2025 – Zacks.com announces the list of stocks and ETFs featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include NVIDIA Corp. NVDA Meta Platforms Inc. META, Alphabet Inc. GOOGL, Microsoft Crop. MSFT and Amazon.com Inc. AMZN.
On Feb. 26, after the closing bell, NVIDIA Corp. — the undisputed global leader of the generative artificial intelligence (AI)-powered graphical processing units (GPUs) — released outstanding fourth-quarter fiscal 2025 earnings results and strong guidance for first-quarter fiscal 2026.
Yet, the stock price of NVDA plummeted 8.5% on Feb. 27 on concerns of a minor miss in adjusted gross margin and slowing growth of year-over-year revenues and earnings as we have seen in the last several quarters. Concerns about a possible tariff on NVIDIA’s inputs and export restrictions also dampened investors’ sentiment.
Irrespective of these drawbacks, NVIDIA has been able to keep the flag high with its path-breaking vision, innovation and solid execution. The recent decline in stock price has actually placed NVDA in negative territory year to date. We believe that, at this stage, NVIDIA offers a lucrative buying opportunity for the rest of 2025.
NVIDIA came up with quarterly adjusted earnings of $0.89 per share, beating the Zacks Consensus Estimate of $0.84 per share. This compares to earnings of $0.52 per share a year ago. Reported quarterly revenues of $39.33 billion compare to the Zacks Consensus Estimate of $37.72 billion, representing a surprise of +4.3%.
Despite this stellar performance, a section of financial researchers is complaining about slowing growth. NVIDIA’s non-GAAP gross margin of 73.5% reflects a contraction of 3.2% on a year-over-year basis and 1.5% sequentially. This was primarily due to a transition to more complex and higher-cost systems within the Data Center segment.
The Data Center revenues came in at $35.58 billion compared with the consensus estimate of $33.51 billion, marking a jump of 93% year over year. Within this segment, Computing revenues were $$32.56 billion versus the consensus mark of $30.22 billion. Networking revenues were $3.02 billion versus the consensus estimate of $3.35 billion.
Most importantly, NVDA has mostly resolved the supply-related issues of its next-generation Blackwell chips and ramped up its production and shipment. In the reported quarter, the company sold $11 billion Blackwell chips, higher than the consensus estimate of $6-7 billion.
NVIDIA expects an impressive first quarter fiscal 2026 buoyed by rock-solid demand for its AI-powered GPUs, and downplayed the Chinese DeepSeek-related availability of low-cost solution concerns. NVDA’s CEO Jensen Huang said that the next-generation AI model requires more computing power. Per Huang, “The amount of computation necessary to do that reasoning process is 100 times more than what we used to do.”
NVDA anticipates first-quarter fiscal 2026 revenues of $43 billion (+/-2%), higher than the current Zacks Consensus Estimate of $41.06 billion. The non-GAAP gross margin is projected at 71% (+/-50 bps). Non-GAAP operating expenses are estimated at $3.6 billion.
The consensus mark for non-GAAP gross margin is 72.1%. Nevertheless, an adjusted gross margin of more than 70% for a company that is the leader of a highly competitive high-end industry is something commendable.
The AI frenzy will continue with astonishing spending. The four major data center operators — Meta Platforms Inc., Alphabet Inc., Microsoft Crop. and Amazon.com Inc. pledged $325 billion as AI expenditure in 2025.
On Jan 21, President Donald Trump unveiled a joint venture called “Stargate” with OpenAI, Oracleand Softbank. The project will create an AI infrastructure, especially data centers in the United States.
The initial investment of $100 billion can go up to $500 billion in the next four years. This expenditure will be in addition to Softbank’s pledge of $100 billion in December to create AI infrastructure in the United States.
Apple has decided to invest $500 billion over the next four years, part of which will be spent on developing and manufacturing AI servers to power its Apple Intelligence AI tools. Moreover, Meta Platforms is reportedly planning to construct a new data center campus for its AI projects, with potential costs exceeding $200 billion.
For all the above-mentioned companies, NVIDIA is the largest chipset supplier. In addition to Blackwell, on June 2, 2024, NVDA unveiled its new AI chip architecture called Rubin. The Rubin architecture will have new GPUs to launch AI systems, CPUs and networking chips. It will also have new features like a central processor called Vera. Rubin is expected to be introduced in 2026.
The automotive industry may become another growth driver for NVIDIA in the future. In the last reported quarter, Automation segment revenues came in at $570 million compared with the consensus estimate of $472.35 million, up 102.9% year over year. The Automation segment’s growth was primarily driven by NVDA’s self-driving platforms. The company is increasingly focusing on powering ADAS, autonomous vehicles, and robotics.
NVIDIA has an expected revenue and earnings growth rate of 45% and 41.1%, respectively, for the current year (ending January 2026). The Zacks Consensus Estimate for current-year earnings has improved 0.2% in the last seven days.
It has an expected revenue and earnings growth rate of 21.7% and 25.5%, respectively, for next year (ending January 2027). The Zacks Consensus Estimate for next-year earnings has improved 0.4% in the last seven days. NVDA has a long-term (3-5 years) EPS growth rate of 20%, outpacing the S&P 500 Index’s 12.2% growth rate.
NVIDIA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The company has a return on equity (ROE) of 122.83% compared with the S&P 500’s ROE of 17.1% and the industry’s ROE of a mere 6.4%.
NVDA has a current net margin of 55.85% compared with the industry’s net margin of 8.4% and the S&P 500’s net margin of 12.57%. It has forward P/E (price/earnings) of 31.14% compared with the industry’s P/E of 31.01% and the S&P 500’s P/E of 18.9%.
As of Jan. 26, 2025, NVDA’s cash, cash equivalents and marketable securities were $43.2 billion, up from $38.4 billion as of Oct. 27, 2024. The increases primarily reflect higher revenues partially offset by stock repurchases. As of Jan. 26, the total long-term debt was $8.46 billion, which remained unchanged sequentially. NVIDIA generated $16.6 billion in operating cash flow, up from the year-ago quarter’s $11.5 billion
The short-term average price target of brokerage firms for the stock represents an increase of 35% from the last closing price of $120.15. The brokerage target price is currently in the range of $220-$135. This indicates a maximum upside of 83.3% and no downside.
Shares of NVDA have seen a growth rate of -10.5% year to date. However, given that earnings estimate revisions are likely to trend higher in the coming weeks, many analysts are expected to raise their price targets. This will make NVDA’s risk/reward ratio more favorable.
NVIDIA represents a rare opportunity to invest in a company with proven execution and substantial unrealized potential in the AI revolution. At this stage, it will be prudent to buy this stock on every dip. Create a systematic investment plan for this stock to do a cost average.
Hold this stock for the long term as the company’s strong execution of the last several quarters and robust future projections will generate more value. Consequently, the stock price of NVIDIA should witness an attractive upside.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Previewreports. If you want an email notification each time Sheraz publishes a new article, please click here>>>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.