TLDR
- Nvidia stock fell 0.4% to $141.40 ahead of rival Broadcom’s earnings report, which could indicate AI chip market demand
- UBS maintains Buy rating on Nvidia with $175 price target, citing potential $1 trillion revenue opportunity from AI infrastructure projects
- Broadcom earnings expected to show $1.57 per share on $14.96 billion revenue, up from $1.10 per share on $12.49 billion last year
- Nvidia’s networking segment grew 64% quarter-over-quarter to $5 billion, driven by NVLink solutions and Spectrum-X portfolio
- AI market spending expected to rise over 80% this year with another 50% increase projected for 2026
Nvidia shares dropped 0.4% to $141.40 in early Thursday trading as investors awaited earnings from competitor Broadcom. The results could provide insights into the strength of demand for artificial intelligence chips across the sector.
Broadcom is scheduled to report second fiscal quarter earnings after Thursday’s market close. Analysts expect the company to post earnings of $1.57 per share on revenue of $14.96 billion, according to FactSet polling.
This represents growth from the same period last year when Broadcom reported $1.10 per share on $12.49 billion in revenue. The earnings could shed light on the broader AI chip market’s health.
While Broadcom has stated its chips don’t directly compete with Nvidia’s graphics-processing units in every AI market, both companies do compete in providing advanced networking infrastructure for AI data centers. Broadcom shares rose 0.9% ahead of the earnings announcement.
UBS Sees Major Growth Potential
UBS analysts maintained their Buy rating on Nvidia stock with a $175 price target this week. The investment bank highlighted the company’s visibility into what they called “tens of gigawatts” of AI infrastructure projects.
The analysts estimate that even a conservative pipeline of 20 gigawatts could present a revenue opportunity of at least $1 trillion. This calculation is based on Nvidia’s projected revenue range of $40-50 billion per gigawatt.
UBS believes these projects could be deployed over a 2-3 year period. This timeline suggests Nvidia might have visibility to approximately $400 billion annually in data center revenue, which would double current estimates for 2026.
The positive outlook stems from Nvidia’s recent earnings call where management discussed the company’s pipeline and growth potential. UBS analysts noted the company’s strategic positioning in the expanding AI and data center markets.
Nvidia’s networking segment has already shown strong performance, growing 64% quarter-over-quarter to reach $5 billion in the first quarter. This growth was driven primarily by NVLink solutions and the Spectrum-X portfolio, which saw substantial sales and new customer traction.
Market Dynamics and Competition
The AI chip market continues to show positive signs of growth. Mark Haefele, chief investment officer at UBS Global Wealth Management, noted that new entrants to the AI market are spending at a faster pace.
Capital expenditure in the sector is likely rising over 80% this year with another 50% increase projected for 2026. However, chip-related controls due to intensifying US-China tech rivalry could weigh on investor sentiment in the near term.
Other chip stocks showed mixed movement on Thursday. Advanced Micro Devices climbed 0.6%, Intel gained 0.5%, while Qualcomm traded flat.
Nvidia’s business extends beyond AI semiconductors. CEO Jensen Huang recently appeared on Nintendo’s Creator’s Voice YouTube series, discussing custom processors for the Japanese company’s Switch 2 console, which released in most regions on Thursday.
The company currently trades with a market capitalization of $3.4 trillion and has gained nearly 20% over the past year. Nvidia maintains an impressive 86% revenue growth rate with current revenue of $148.5 billion and a gross profit margin of 70%.
Broadcom’s earnings results after Thursday’s market close will provide the next key data point for assessing demand trends in the AI infrastructure space.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
