UBS released a report on NVIDIA (NVDA.US). Its stock price has been middling, but supply chain signals remain bullish. The company's management appeared somewhat frustrated by the market's general doubts about its growth and margin sustainability.

However, ahead of the upcoming earnings announcement (the company will release its 4FQ results on February 25), the market sentiment is relatively positive, especially with the upcoming GTC next month.

UBS forecast that NVIDIA's 4FQ revenue (for the quarter ending January) will be approximately USD67.5 billion, about USD2.5 billion higher than the company's guidance. Whether revenue from the Chinese market will rebound remains uncertain, as there is an immense adoption of domestic GPUs in the region.

However, with reference to AMD's performance last quarter, NVIDIA may still record several billion US dollars in revenue from the Chinese market in 4FQ. In terms of KPIs, UBS noted that just in the past earnings season, the forecast for hyperscale capex for 2026 increased by approximately USD145 billion, or about 25%, with current capex growing about 60% YoY.

Based on supply chain research, UBS again raised NVIDIA's earnings forecast. The EPS forecasts for 2026, 2027, and 2028 are USD9.11, USD12.08, and USD12.92, respectively. Given the myriad of debates, the broker doubted the stock will trade for any more than 20x NTM EPS. Therefore, the TP was only slightly raised from USD235 to USD245, with a Buy rating kept.
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AASTOCKS Financial News
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