Nvidia Corp (NASDAQ:NVDA, ETR:NVD) will report earnings Wednesday after the bell in what Wedbush analysts are calling a pivotal moment for both the company and the broader technology sector.
“There is one chip in the world fueling the AI Revolution and that is Nvidia,” the firm wrote, stressing that demand for its processors is running at a 10:1 ratio against supply.
Wedbush believes Nvidia's results and commentary from CEO Jensen Huang will be another positive catalyst for tech stocks and a reminder that “this is still only the bottom of the 2nd inning in the 9-inning game around building out the AI Revolution.”
A key development for Nvidia has been regaining access to the Chinese market through what the analysts described as a “pay for play (15% fee to White House) model.” While unusual, they argue the framework is “very bullish news for Nvidia as well as AMD down the road.”
The firm noted that the AI buildout is expanding well beyond Silicon Valley. “AI is being driven by a handful of US Big Tech players spending almost $350 billion on CapEx this year with now the cavalry coming as more enterprises and governments from around the world get into the AI spending game,” the analysts wrote.
Countries such as Saudi Arabia and the UAE, they added, are “diving into the deep end of the pool with Nvidia and US hyperscalers set to build out massive AI driven data centers.”
Wedbush pushed back against concerns about overheated valuations, saying history shows transformative growth cycles often defy near-term multiples.
Shares of Nvidia traded hands at $181 on Monday afternoon, having surged about 43% in the last 12 months.
“If you focus solely on valuation looking out a year with price-to-earnings ratio, you would have missed every transformational growth tech stock the last 20 years,” the analysts wrote.
They pointed to Palantir as one such name, arguing it could become “a trillion market cap in the next two to three years given its AI secret sauce.”
“In a nutshell, the Street continues to underestimate the demand curve for the AI Revolution being led by Nvidia and this week will be another flex the muscles moment for Jensen and Nvidia as well as the AI Revolution bull thesis.”