Nvidia (NASDAQ:NVDA) Q4 Preview: What to Expect?

Giant chip Nvidia (Nasdaq:NVDA) will release its financial results for the fourth quarter of fiscal year 2024 on February 21. Wall Street analysts are optimistic about NVDA and expect the company to deliver strong financial numbers due to demand driven by artificial intelligence (AI), especially in its data center business.

It should be noted that most analysts raised their price targets for NVDA stock before the Q4 print run. One analyst, Vijay Rakesh of Mizuho Securities, continues to see Nvidia as β€œthe top AI/ML (machine learning) game.” In a note to investors dated February 12, Rakesh said near-term demand for the company's chips is outpacing supply, indicating strong sales numbers in the coming quarter. The analyst raised sales growth estimates for fiscal 2025 and 2026 for NVDA. Furthermore, he raised his price target to $825 from $625.

NVDA's Q4 revenue more than triples

Wall Street analysts expect Nvidia to generate revenue of $20.37 billion in the fourth quarter compared to $6.05 billion in the same quarter a year earlier. This means that NVDA's revenue in the fourth quarter will triple year over year.

This explosive growth in the company's top line is likely driven by continued momentum in its data center business. The continued rise of the NVIDIA HGX platform, the reference architecture for AI supercomputers and data center infrastructures, will likely drive data center revenue and overall sales.

Thanks to higher sales and operating leverage, Nvidia's net profits could also represent a big jump in the fourth quarter. Analysts expect NVDA to report earnings of $4.59 per share in the fourth quarter, an increase of about 422% year over year.

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Is Nvidia a good stock to buy now?

According to the consensus analyst rating, Nvidia is a buy ahead of its Q4 earnings release. NVDA stock has 37 Buys and three Holds for a Strong Buy consensus rating. However, since NVDA stock is up roughly 47% year to date and is up roughly 252% in one year, analysts' average price target of $746.91 suggests limited upside potential of 2.86%.

Commenting on the limited upside potential, Susquehanna analyst Christopher Rowland said investors have already factored in a lot of potential short-term gains. He expects NVDA to deliver a strong performance in the fourth quarter and believes the size of the beat will determine the future course of NVDA stock. Rolland reiterated his buy on NVDA stock on February 14 and increased his price target to $850 from $625.

Insights from options trading activity

It should be noted that options traders are pricing in a +/-11.14% move in NVDA stock on earnings, which is larger than the prior quarter's earnings-related move of -2.46%.

The expected movement is determined by calculating the range of options closest to expiration after the earnings announcement.

Learn more about TipRanks Options Widget here.

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Nvidia is poised for strong fourth-quarter results, with AI-driven demand in its data center business supporting its sales and profits. However, the recent rise in its shares suggests that the positives are already reflected in its current market price.

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