Nvidia (NASDAQ:NVDA) is preparing to report its fiscal fourth-quarter (January quarter) earnings on Wednesday, February 26. Known for its consistent beat-and-raise earnings performance, the question remains whether the AI chip giant can maintain its streak. More importantly, will a successful report reinvigorate the stock and push it back into rally mode?
In recent months, the market sentiment surrounding Nvidia appears to have shifted. According to Stifel's top analyst, Ruben Roy, expectations heading into the fiscal fourth quarter (F4Q) are lower than in prior quarters. Roy, who ranks among the top 3% of Wall Street stock experts, notes that the estimate revision trajectory suggests a more cautious outlook this time.
"In contrast to prior quarters, the estimate revision trajectory suggests lower expectations heading into F4Q," said Roy. He points out that the valuation reflects this sentiment, with NVDA shares trading at 26x 2026 EPS compared to a 33x three-year average.
Feedback from recent checks has been mixed, particularly regarding the demand for Blackwell. While discussions around its demand remain largely positive, uncertainties about Nvidia's timeline for fulfilling this demand have led to a wide range of outcomes. The focus has shifted to a potential robust Blackwell ramp in the year's second half, but it remains uncertain whether this will lead to a substantial B200/GB200 ramp or a quicker transition to the B300/GB300 cycle.
"Longer-term," Roy explains, "we do not think this will matter but, for now, given continued post-DeepSeek market jitters, we are unlikely, in our view, to see a strong positive catalyst to shares out of earnings."
In terms of the financial outlook, Roy's F4Q25 revenue forecast stands at $37.5 billion, closely aligning with the midpoint of Nvidia's guidance and slightly lower than the consensus estimate of $38.1 billion. He also projects an adjusted EPS of $0.83 and an adjusted gross margin of 73.5%, which are close to the consensus estimates of $0.85 and 73.4%, respectively.
Although Roy does not anticipate a blowout quarter, he remains optimistic about Nvidia's prospects. "Despite the likelihood of less meaningful post-earnings positive estimate revisions relative to recent quarters, we believe that the underlying trends in AI infrastructure spend continue to bode well for NVDA," said Roy.
With Nvidia trading at approximately 27x Roy's FY2027 (CY2026) EPS estimate of $5.12, the stock is seen as "reasonably valued" compared to its five-year average multiple of 33x and its peak of 64x in late 2021.
The upcoming GTC event, scheduled for March 17th to 21st, could serve as a potential catalyst for Nvidia's stock. The company is expected to unveil updates on its technology roadmap, provide insights into emerging AI use cases, and discuss customer adoption trends.
Roy maintains a Buy rating on NVDA shares, setting a price target of $180, which suggests a 38% gain in the coming months. The analyst consensus is similarly optimistic, with a mix of 31 Buys versus just 2 Holds, rating NVDA a Strong Buy. The average target of $178.81 implies shares will climb 37% higher over the next year.
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended for informational purposes only. It is crucial to conduct your own analysis before making any investment decisions.
