NVIDIA stock price has gone nowhere this year, even as top indices like Canada’s TSX Composite, Nasdaq 100, and the S&P 500 soared to a record high. It was trading at $190 on Friday, a few points below the crucial $195 resistance level. It remains 10% below the all-time high and has formed a risky pattern ahead of earnings.
NVIDIA Faces Risks and Opportunities
The NVDA stock price has remained in a tight range over the past few months amid major risks and opportunities. The most notable opportunity is the fact that data center spending has accelerated, with the top four companies pledging to spend over $660 billion this year.
More companies, such as CoreWeave, Nebius, IREN, and Oracle, are also spending billions of dollars this year. All these funds will flow to NVIDIA, a company that makes the most advanced AI chips.
The company is also working on launching additional products. Most notably, it is aiming to disrupt companies like Intel and AMD in the CPU industry.
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There is also increased optimism that the company will start shipping its H200 chips to China. A Reuters report noted that the company had received over 700k orders from Chinese companies. With each chip costing $27,000, the company aims to generate over $54 billion in annual revenue.
However, the company faces major risks, with the most notable one being the ongoing memory chip shortage. This shortage may impact the ongoing AI rollout.
Also, it is unclear whether NVIDIA will start selling its chips to China. For one, the US has added Alibaba to an entity list, meaning that it will be illegal for it to do business with NVIDIA.
Additionally, there is a risk of customer concentration as over 50% of its revenue comes from a few customers. It is estimated that Microsoft accounts for about 20% of its revenue.
As a result, there is a risk that a CAPEX spend cut by one company will lead to lower revenues. This cut is possible as Microsoft’s stock has dropped by 30% from its all-time high, as investors question its spending.
NVIDIA Earnings are Expected to Surge
Wall Street analysts expect the company to report strong financial results. The average estimate is that its revenue will come in at $65 billion, up by 68% from the same period last year. This growth will bring its annual figure to over $213 billion.
NVIDIA’s earnings per share (EPS) are expected to come in at $1.53, up by over 40% from the 89 cents it made in Q4’24. NVIDIA has a long history of beating expectations, suggesting its real EPS may come in at $1.60 or higher.
In addition to its Q4 earnings, the NVIDIA stock price will react to its forward guidance. Analysts expect that its annual EPS will jump to $7.767 this year from $4.69 in 2025. Its annual revenue will jump to $327 billion this year.
On the positive side, there are signs that NVDA stock has become a bargain. It has a forward PE ratio of 40 and a PEG multiple of 1.50. All these numbers are well below their historical averages.
NVIDIA Stock Price Prediction: Technical Analysis
The eight-hour chart shows that the NVDA stock price has hit a wall at $194. It has failed to move above that level several times this year.
A closer look shows that it has formed a head-and-shoulders pattern, with the neckline at $170. A H&S is one of the most common bearish patterns in technical analysis.
Therefore, there is a risk that the stock will drop to $170 after earnings. A drop below that level will point to more downside to $150.
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