Nvidia has had a volatile year, what with the January announcement by Chinese AI company DeepSeek that it could develop large language models at lower costs than American AI models.
DeepSeek took a deep bite out of Nvidia, which lost nearly $600 billion in market cap in a single day.
The company's shares were also battered by President Donald Trump's ever-changing tariff program.
Chris Versace, lead portfolio manager for TheStreet Pro Portfolio, said in a May 27 video that "despite the stock's trials and tribulations of the last several weeks, let's say it's still been a very strong position for us."
"However, it is also, as we know, one of the most heavily traded stocks in both the S&P 500 and the Nasdaq 100," he said. "What this means very simply is that its earnings report this week and the company's guidance will likely move the market."
Nvidia CEO Jensen Huang is preparing to release the company's earnings.I-Hwa Cheng / AFP via Getty Images
Analyst: no company more important than Nvidia
Wedbush analyst Dan Ives said didn't hold back when he discussed the power of Nvidia's results.
"There is no company in the world more important to the markets and global investor sentiment than Nvidia with the Street laser-focused tomorrow after the bell when we hear April results/guidance from the Godfather of AI Jensen," he said, referring to CEO Jensen Huang.
Last month, Nvidia revealed it could no longer export its H20 chips to Chinese customers and announced that it would take a $5.5 billion charge as a result.
The H20 is the most cutting-edge AI chip U.S. companies can legally sell to China, which accounted for 13% of Nvidia’s sales in the past financial year.
The White House reportedly put the plan on hold after Huang attended a $1 million-a-head dinner at Trump's Mar-a-Lago.
But later reports revealed that the Trump administration had told Nvidia that the H20 chips would be subject to licensing for China.
"We believe overall AI chip demand around Blackwell continues to significantly outstrip supply," said Ives, referring to Nvidia’s GPU architecture designed for AI.
"Although the big question for tomorrow is what type of dent has the Trump H20/China business played in Nvidia's global demand and outlook going forward," he added.
Ives, who has a $175 price target on the company's shares and an outperform rating, said China business and demand were robust before the Nvidia-Trump chip blockade began.
"In our view the US Big Tech stalwarts are on pace to likely exceed the $325 billion of cap-ex this year with Nvidia playing a major foundational role in the AI build-outs globally," he said.
Nvidia is preparing to launch a lower-cost AI chip for the Chinese market, with mass production expected as early as June, according to Reuters.
"We view Nvidia's results/guidance tomorrow as a clear positive catalyst and 'bright green light' for the broader tech sector and especially the AI Revolution names," Ives said.
Veteran trader: Nvidia's decelerating growth is not a negative
Ives said that the Middle East is a major factor adding to the global demand for Nvidia chips, following Trump's recent four-day visit to the region.
Huang was one of several top tech executives who joined Trump, along with Tesla (TSLA) CEO and top Trump contributor Elon Musk and Amazon (AMZN) chief executive Andy Jassy.
"We believe the market opportunity in Saudi Arabia and UAE alone could over time add another $1 trillion to the broader global AI market in the coming years and this dynamic is not being priced into the market and tech names led by Nvidia," Ives said.
Stephen Guilfoyle has been running Nvidia's numbers and he said that Wall Street doesn't seem sure how to respond to the upcoming earnings report.
"Of the 40 or so sell-side analysts that cover Nvidia, six have increased their earnings estimates since the start of the quarter to be reported, while eight have decreased those estimates," said the veteran trader. "The rest? Guess some of them are probably confident. The rest may just be like deer in the headlights."
Guilfoyle, whose career dates back to the floor of the New York Stock Exchange in the 1980s, said that Nvidia's decelerating year-over-year growth is not a negative."
"This is simply the law of large numbers as this is now the eighth quarter to be reported since Nvidia simply shocked the world with that first AI-inspired quarterly release for its fiscal second quarter of 2023," he said.
"The stock entered the week trading at 31-times 12 months' forward-looking earnings," Guilfoyle said. "This, in my opinion, is not expensive."
Though the S&P 500 currently trades at 21 times, and the tech sector currently trades at 27 times, there is almost nowhere else where investors can find this kind of sustained growth, with numbers this large," he said.
Microsoft (MSFT) still trades at 33-times forward-looking earnings despite six consecutive quarters of sub 15% sales growth, he said.
The company had no shorter-term debt on the books, Versace said, and Nvidia’s current and quick ratios stood at 4.44 and 3.67, respectively, “which is simply outstanding," said Guilfoyle, who has a $165 price target on Nvidia's shares.
