In the world of technology, Nvidia (NASDAQ:NVDA) is set to release its fiscal Q1 2025 earnings after the market closes on Wednesday. Investors are anticipating another strong performance from the AI chip giant. However, as earnings continue to climb, concerns are rising among investors.
The ongoing AI rally, facing a $2.3 trillion test, has prompted questions about when Nvidia’s earnings growth might plateau. Morgan Stanley analysts find it challenging to pinpoint where Nvidia’s earnings could peak. Despite this uncertainty, discussions among hyperscalers about increased long-term spending on AI suggest a positive long-term outlook.
While there is optimism for steady growth, concerns linger about a potential slowdown towards the end of the year due to the upcoming Blackwell product transition. Analysts acknowledge the possibility of an ‘air pocket’ but maintain that current indicators point to robust growth even during the transition period.
Morgan Stanley emphasizes that the future trajectory of the technology sector heavily relies on Nvidia’s performance. A significant run-up in AI stocks leading into this earnings season, coupled with a strong quarterly showing, could result in a consolidation of gains. With AI stocks seeing an average price increase of 27% year-to-date, the Nvidia earnings announcement is anticipated to be a volatile event with a positive bias, according to analysts.
