Nvidia to report solid earnings beat but near-term upside limited, KeyBanc says

Investing.com — KeyBanc Capital Markets expects Nvidia (NASDAQ:NVDA) to “solidly beat” expectations with its upcoming third-quarter earnings report but face headwinds going into the fourth quarter.

The investment bank predicts solid Q3 results from the chipmaker, driven by robust demand for Nvidia’s Hopper products, with guidance for the fourth quarter likely to be slightly above consensus expectations.

However, KeyBanc notes that the near-term upside for Nvidia “is likely to be negatively impacted” due to several factors.

These include delays in the H20 product in China amid a shift towards domestic AI solutions, a loss of market share to AMD (NASDAQ:AMD)’s MI308, and the postponement of H200 due to the ramp-up of a competing product, Blackwell (B200).

Furthermore, Nvidia’s recent switch from Monolithic Power Systems (NASDAQ:MPWR) to Infineon Technologies AG NA O.N. (ETR:IFXGn) as the primary power management integrated circuit (PMIC) vendor is expected to create supply constraints, limiting the availability of GB200 NVL server racks in the fourth quarter.

Reflecting these headwinds, KeyBanc has revised its fourth-quarter estimates downward, from $40.0 billion in revenue and $0.88 earnings per share (EPS) to $37.7 billion in revenue and $0.83 EPS. This adjustment is still above the consensus of $37.1 billion in revenue and $0.82 EPS.

While this “lack of more meaningful upside” could weigh on Nvidia’s near-term prospects, KeyBanc analysts remain bullish on the company’s risk-reward profile for the long run, primarily due to “outsized GenAI growth.”

The firm reiterated an Overweight rating on the stock with a price target of $180. Nvidia will report earnings on Wednesday, Nov. 20, following the market close.

The AI darling’s shares surged 183% since the start of the year, making it the world’s most valuable company.