Nvidia reports earnings Wednesday after the market close, and J.P. Morgan analyst Harlan Sur says commentary on competitiveness, China shipments and infrastructure deals could matter more for the stock than the revenue numbers themselves. Nvidia's revenue outlook has beaten Wall Street's consensus by an average of 4% over the past four quarters, yet the stock has still fallen 3% to 5% on average in the following month.
Nvidia's revenue outlook has topped Wall Street's consensus by an average of 4% over the past four quarters, yet the stock has fallen between 3% and 5% on average in the week and month that followed those reports. Sur said in a Monday note to clients that what Nvidia says about its competitiveness and recent business decisions could matter more this time than the July-quarter results themselves.
Competition from custom silicon weighs on the stock
Questions over Nvidia's dominance in the AI-chip market have pressured shares as customers roll out their own custom chips and companies such as Cerebras emerge with inference-focused products, Sur noted. That narrative "will be challenging to dispel entirely" as several chip programs ramp up over the next few years, he said. Still, Sur said Nvidia's flexible platform, built to serve both enterprise and sovereign AI customers, should help it keep its lead even as GPUs eventually cede some market share to custom chips.
Infrastructure deals and China shipments in focus
Nvidia's commentary on its recent infrastructure funding agreements could also move the stock, Sur said. Earlier this month, Nvidia said it is partnering with Apollo Global Management, Blackstone and Goldman Sachs to deploy more than $500 billion in third-party capital toward AI data-center construction, alongside a separate partnership with SB Energy. UBS analyst Timothy Arcuri said the agreements help ease worries about the durability of AI demand because they lock in infrastructure funding. Any update on China could matter too: Sur pointed to a Financial Times report that some Chinese customers have received initial deliveries of approved H200 chips, which he called a material upside lever for Nvidia's October-quarter guidance.
Memory shortages and the quarter ahead
Surging demand for memory chips has tightened supply, and Sur said Nvidia has adjusted the high-bandwidth memory content in its upcoming Rubin and Rubin Ultra GPUs to work around the shortage. Arcuri added that memory-chip price inflation has driven much of the recent rise in hyperscaler spending, a dynamic he called ultimately bullish for Nvidia. Analysts polled by FactSet expect Nvidia to report $92.3 billion in July-quarter revenue, with data-center revenue up 110% from a year ago to $86.3 billion and adjusted earnings of $2.09 a share. For the October quarter, the FactSet consensus calls for $104.2 billion in revenue and adjusted earnings of $2.37 a share, though Arcuri said he could see October-quarter revenue reaching more than $110 billion as Blackwell shipments hold stable and the Rubin platform enters the mix.
Source: MarketWatch
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