Nvidia (NVDA) will likely post strong Q4 results and Q1 guidance as recent investor worries about a “near term ‘air-pocket’ are overblown,” UBS said in a note to clients emailed Tuesday.
Nvidia has “essentially tread water since last earnings” amid supply chain concerns and worries surrounding the ramp of Blackwell server racks, the investment firm said.
However, “Blackwell chipset/compute board yields have inflected higher, and mix in both FQ4 (Jan) and FQ1 (Apr) is shifting very rapidly to Blackwell and away from Hopper,” said UBS analysts including Timothy Arcuri.
Also, Nvidia “recognizes revenue when ODMs/OEMs take title of compute boards and we believe that in many cases end customers like the big hyperscalers are using a buy and sell model to leverage ODMs or their suppliers’ working capital, and in some instances may be providing bridge financing for this inventory,” the note said.
In addition, the main hardware issue has “seen significant recent improvement,” UBS said, adding, however, more improvement on other components is still needed.
The investment firm’s estimate for Nvidia’s Q4 revenue is “largely unchanged” at about $42.1 billion, while the Q1 revenue estimate was also kept at roughly $47 billion, the note said.
UBS has a buy rating on Nvidia and a price target of $185.