Benchmark Reiterates Buy Rating on NVIDIA (NVDA)

Benchmark analyst Cody Acree reiterated a Buy rating and $190.00 price target on NVIDIA (NASDAQ: NVDA).

The analyst commented, "With Nvidia’s shares up 66% over the past twelve months and with its stock near the low-end of a relatively tight trading range since October of last year, we believe investors attitude toward Nvidia was somewhat mixed heading into earnings, with many looking for cracks in the AI spending outlook and others looking for an excuse to re-engage NVDA’s shares driven by the delayed, but confirmation of now aggressive adoption of its Blackwell products. We believe NVDA’s earnings release was largely positive, with an “amazing” Blackwell ramp driving upside results and guidance, with a magnitude more reminiscent of its earlier 2024 outperformance levels. However, the company’s focus on meeting aggressive Blackwell demand has left it prioritizing manufacturing volumes at the expense of maximizing production efficiencies, which is weighing on near-term gross margin results. NVDA did say that as Blackwell ramped toward full production volumes, it had many opportunities to improve manufacturing costs and expected its gross margins to exit the fiscal year in the mid-70’s, up from the company’s 1Q guidance of 71%, which is expected to decrease from 73.5% in Q4, 75% in Q3, and a high of 78.9% in Q1 of last year. The question we believe many investors have is regarding the company’s 2Q gross margin, which NVDA has only said that during its Blackwell ramp that its gross margins were expected to be in the low-70s, before improving as the year progressed. We believe the company will likely see its margin stay roughly flat, to slightly up, in Q2, into the 71.0%-71.5% range. We note that all of these margin comments are consistent with NVDA’s prior forecasts & should already be well considered by the Street."

For an analyst ratings summary and ratings history on NVIDIA click here. For more ratings news on NVIDIA click here.

Shares of NVIDIA closed at $131.28 yesterday.

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