Nvidia Stock Performance Overview

Investing.com — Nvidia (NASDAQ:NVDA) is trading lower in premarket on Thursday, currently down around 2.9%. This decline follows the company’s impressive quarterly results announced on Wednesday, which were characterized as a “beat and raise”.

Quarterly Results

Nvidia reported July-quarter sales of $30 billion, surpassing the high end of its guidance range of $29-$30 billion. Furthermore, the company provided an October-quarter guidance midpoint of $32.5 billion, aligning with market expectations of $32-$33 billion.

Management Insights

Management expressed optimism regarding the upcoming rollout of the Blackwell GPU, anticipated to drive significant revenue in the January quarter. However, Citi analysts raised concerns about the company’s gross margin mix, which has negatively impacted the stock price.

Gross Margin Concerns

Citi’s analysis highlighted that the increased presence of H200 GPUs and High Bandwidth Memory (HBM) in Nvidia’s product offerings is expected to lower gross margins over the next two quarters. They noted that the rising costs associated with the H200 GPUs are affecting non-GAAP gross margins as the product begins to ramp up production.

While the earnings per share (EPS) estimate for the January quarter remains steady, broader market expectations might adjust downward due to these margin pressures.

Future Projections

Citi stated, “We expect the stock to likely remain range-bound through the next two quarters before seeing a year-over-year sales and gross margin inflection in the April quarter.”

This anticipated change is expected to result from the full-scale production of Blackwell GPUs slated for the April quarter. CES in January is highlighted as a significant upcoming catalyst for the stock.

Despite the near-term challenges regarding margins, Citi maintains a Buy rating on Nvidia, with a price target of $150. This is based on a consistent 35x price-to-earnings ratio for calendar year 2025 EPS, showcasing their long-term confidence in Nvidia’s prominence in AI and data computing markets.