Ahead of NVIDIA Corp.’s (NASDAQ:NVDA) much-anticipated third-quarter results on Wednesday, leading analysts remain optimistic on the stock, alongside the state of the broader AI economy, amid growing concerns of a bubble.
This Is ‘Not A Bubble’
Fund manager Nancy Tengler, the CIO of Laffer Tengler Investments, has pushed back against mounting concerns regarding a “bubble” in the AI trade, saying that the rally in AI stocks is grounded in fundamentals, not froth, while appearing on Yahoo Finance’s ‘Morning Brief’ on Tuesday.
Citing her experience as a fund manager during the Dot-Com Bubble in the 1990s, Tengler said, “it didn’t look at all like this,” adding that the strongest performers back then were “companies with no earnings.”
Tengler emphasized that NVIDIA still anchors her core holdings, while reiterating that the AI trade remains rooted in tangible enterprise demand, not hype-driven momentum, and as such, she added this was “not a bubble.”
While acknowledging that there were risks of overcapacity in the segment, she said, “It doesn’t look like it yet, and it doesn’t look like it for the foreseeable future.”
The Street Knows ‘NVIDIA’s Results Will Be Strong’
Chief Market Strategist at The Futurum Group, Shay Boloor, said that “the Street already knows that NVIDIA’s results will be strong,” adding that what matters will be the margins, with the company guiding 74% margins during the quarter.
“If it can hold or expand at that level while shipping more systems,” Boloor said, it would help communicate to investors and the markets “that the stock will maintain its current value,” which positions it as the most valuable company in the world, with a market capitalization of $4.63 trillion.
Boloor also emphasized several other secular growth drivers that are beginning to emerge for the company, beyond just its data center opportunity.
He pointed to Tesla Inc.’s (NASDAQ:TSLA) Full Self-Driving system, Alphabet Inc.’s (NASDAQ:GOOG) Waymo, and humanoid robotics like Optimus as use cases reinforcing NVIDIA’s role as the foundational layer for the next wave of intelligent infrastructure.
‘AI Opportunity’ Is Still Big
Investor Ross Gerber of Gerber Kawasaki Wealth and Investment Management said on Tuesday, in a post on X, that NVIDIA’s earnings will show the markets just “how big the AI opportunity” truly is.
Gerber is essentially positioning NVIDIA as a litmus test not just for the trillion-dollar AI trade, but for the health of the broader economy, just as he sees Home Depot Inc.’s (NYSE:HD) third-quarter results on Tuesday as a signal for the Federal Reserve to cut interest rates.
Another 32% Upside For The Stock
Independent investor and YouTuber, Parkev Tatevosian, CFA, sees significant contributions from NVIDIA’s latest generation Blackwell GPUs, alongside emerging tailwinds from automotives, as driver-assistance and autonomous systems begin to scale.
As a result of these tailwinds, alongside the company’s growing partnerships with the big-tech hyperscalers, Tatevosian sees the intrinsic value per share rise “from around $190 per share up to $240 per share,” representing a 32% upside from current levels.
He said that this value comes with a margin of safety applied, leading him to describe the stock as being “fairly valued at these valuations.”
NVIDIA Shares Drop Ahead of Earnings
Shares of chipmaker NVIDIA were down 2.81% on Tuesday, closing at $181.36, and are up 0.18% overnight, ahead of the company’s third-quarter results. The stock is up 31.13% year-to-date, and trades at 26.95 times forward earnings and 27.06 times sales.
The stock scores high on Momentum, Growth and Quality in Benzinga’s Edge Stock Rankings, with a favorable price trend in the Medium and Long terms. Click here for deeper insights into the stock, its peers and competitors.
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