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Nvidia's (NVDA) first quarter results left much to be desired, but it looks like Wall Street is shaking off the obvious bad news for now.
Shares in the AI chip giant gained 5% before the bell on Thursday, despite the company posting a once-unthinkable quarterly profit miss after the market close on Wednesday.
The magnitude of the earnings whiff — a shortfall of $0.12 per share — was another disappointment.
Nvidia pinned the shortfall on the impact of the US ban on shipments of its H20 chips to China. The company also said it expects to lose out on roughly $8 billion in sales of H20s in the second quarter.
As to why stock investors are looking past the profit miss, analysts point to a few factors.
For one, Nvidia said it would continue to work toward achieving a mid-70% growth profit margin late this year. The number was important to hear for Nvidia bulls, and reflects Nvidia executives' confidence in an efficient ramp-up in production of its Blackwell chip.
Read more: How does Nvidia make money?
And two, Nvidia founder and CEO Jensen Huang said global demand for its AI infrastructure products is "incredibly strong."
The chip giant also talked up accelerating AI usage demand at Microsoft (MSFT), OpenAI (OPAI.PVT), and other hyperscalers on the earnings call.
"No beat and raise again, but good enough to avoid disappointment," HSBC analyst Ryan Mellor said in a note.
Here's what Wall Street more broadly is saying about Nvidia's quarter. (To track post-earnings trends on the Street for Nvidia, such as sales and earnings revisions, head to the 'analysis' section on Yahoo Finance.)
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Rating: Buy (reiteration)
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Price Target: $180 (raised from $150)
"Nvidia continues to emphasize that the Blackwell launch is the fastest product launch in company’s history. While management did not disclose the total contribution from the platform in the quarter, comments suggest it was at least $24 billion vs $11 billion last quarter.
"We view this positively as expectations were for ~$20 billion Blackwell’s this quarter. We think Nvidia's Blackwell will continue to see demand running well above supply. In fact, the company’s key supplier such as Wistron estimates shipping 100-200 NVL servers per week in the first quarter and now expects a 3x increase by June. We expect Blackwell units to surpass 900K units in the July quarter given its faster-than-expected adoption and deployment."
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Rating: Neutral (reiteration)
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Price Target: $135 (raised from $120)
