25 Feb Nvidia’s typical ‘beat and raise’ earnings announcement may not be enough to keep lifting the stock
It’s normally music to investors’ ears: A company exceeded Wall Street forecasts for earnings and raised their outlook for the next quarter’s performance. But after Nvidia ‘s monster gains and strong earnings reports in recent years, the so-called beat-and-raise may no longer be enough on its face to satisfy growth-hungry traders. “The beat and raise for NVDA is becoming clockwork at this point,” Cantor analyst C.J. Muse wrote to clients this week. “The problem with this consistency… the bar has now been reset and standard beats/ raises are no longer being rewarded.” Analysts and investors are gearing up for the chipmaker’s earnings report after the bell on Wednesday. Given the stock’s size with a market cap above $3 trillion and recent leadership in the bull market, the reaction to the report is expected to drive movement in the broader market. There’s good news and bad news. The good is that Nvidia is widely expected to surpass consensus forecasts set by analysts, as it has for the past several quarters amid the artificial intelligence boom. The bad news: The company can once again hike expectations for future earnings, but it might not be by as much as investors would like. In this vein, Cantor’s Muse said to expect a solid beat for the quarter. However, he said to plan for “only a very modest raise” on forward guidance that meets consensus forecasts. Soft guidance? Raymond James’ Srini Pajjuri, meanwhile, said clients shouldn’t be surprised if Nvidia offers “soft” guidance for the next few quarters. That’s due to constraints in the supply of its chips, which the analyst said can lead to some weakness. The firm’s base case for the fiscal first quarter is for revenue to come in-line with consensus forecasts at $42 billion. If the stock takes a leg down on the back of earnings, Pajjuri said to see it as a buying opportunity. This is especially true given the upcoming GPU Technology Conference held by Nvidia in March, he said, as it can be a positive catalyst for shares. While Melius Research analyst Ben Reitzes said the sales outlook for the fiscal second quarter of 2026 seem “great,” he also noted a “bumpy” path in Nvidia’s transition to Blackwell chips. Like Pajjuri, he pointed to supply snafus. Because of that, he also said to expect guidance that is more in line than usual for at least the next quarter. Nvidia has said it likes to post an outlook quarter by quarter, but Reitzes recalled that the company had shares expectations for longer-term growth at this time last year. With this in mind, he would like to see clarity on where Nvidia revenue is going for the next several quarters to ease concerns among some investors that growth is cooling. “With investors more jittery, the guidance may need to include some multi-quarter commentary as well to soothe near-term concerns,” he said. On the other hand, UBS analyst Timothy Arcuri has reason for optimism on future performance. Arcuri doesn’t expect Nvidia’s first-quarter revenue guidance to match the firm’s estimate of around $47 billion. But when the quarterly actually ends, he said the company may end up being able to meet this figure if revenue tied to the Blackwell chip takes off. NVDA 1Y mountain Nvidia, 1-year More broadly, analysts see the report coming at an important moment for the stock. After two banner years for gains, the stock has dropped nearly 5% in 2025 as concerns tied to AI infrastructure spending and competition have worried market participants. Yet Wall Street expects the retail investor favorite and crown jewel of today’s stock market to rebound higher. The average analyst polled by LSEG has a buy rating with a price target implying more than 36% in upside.