10, 9, 8, 7… the countdown is almost over. After today’s closing bell, all eyes will turn to Nvidia (NASDAQ:NVDA) as the AI chip giant reports fiscal first-quarter results.
Claim 55% Off TipRanks
200% short exposure to NVDA with NVDSLooking ahead to the print, 5-star HSBC analyst Frank Lee expects 1QFY27 revenue of $81.1 billion, which is 4% and 3% above the guide and Visible Alpha consensus estimates of $78 billion and $78.6 billion, respectively. For 2QFY27, he is calling for revenue of $91.1 billion vs. the Street at $85.6 billion, all pointing to another “beat and raise” performance.
Yet, will that be enough to spur a post-earnings rally? Lee is not sure and notes that over the past five years, the share price’s major moves have been driven by a combination of its evolving AI product roadmap, beginning with strong ASP (average selling price) power from first-generation AI GPUs such as A100 and H100, which supported significant earnings upside, alongside a consistent “beat and raise” pattern.
However, the analyst argues that since the emergence of themes like sovereign AI and opportunities from neoclouds, no “new narrative has emerged.” As a result, the shares have underperformed the SOX index over the past six months, despite two GTC events and two sets of financial results that beat estimates and raised guidance.
That means potential new narratives are becoming a “bigger key focus” going forward. Despite the continued rise in CapEx by CSPs (cloud service providers), which shows no signs of slowing, Nvidia now has to share that spend with memory makers, AI networking players, and server CPU vendors.
As a result, the company needs to demonstrate progress in diversifying its non-CSP customer base in order to “fuel its AI GPU momentum.” New TAM (total addressable market) opportunities, including agentic AI server CPUs and recent optics-related deals, could emerge as additional narratives. These developments might drive further earnings estimate revisions or support a potential re-rating of the stock.
In the meantime, Lee remains confident about the company’s trajectory. The analyst raised his FY28 EPS by 27% to $13.01, which is 16% above the Street’s $11.20 estimate, driven by higher FY28 data center revenue expectations of $528 billion vs. consensus at $465.3 billion. This is supported by an upward revision in CoWoS (chip-on-wafer-on-substrate) allocation from 900,000 to 1.1 million wafers.
“We expect the Blackwell momentum and Rubin ramp to sustain earnings momentum, with potential upside from TAM expansion beyond traditional hyperscalers,” Lee summed up.
Taken together, Lee assigns NVDA a Buy rating ahead of the readout, while raising his price target from $295 to $325, implying upside potential of 44.5% over the next 12 months. (To watch Lee’s track record, click here)
The rest of Wall Street remains overwhelmingly bullish as well. Nvidia carries a Strong Buy consensus rating backed by 40 Buy ratings against just 1 Hold and 1 Sell. Meanwhile, the Street’s average price target of $281.97 suggests the stock could still climb another 25% over the next year. (See NVDA stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.