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While expectations aren’t really low, they believe Nvidia stock could continue to move higher on “a more modest beat/raise.”
The analysts also argue that the current AI expenditure surge is driving a noteworthy imbalance in favor of GPU demand over supply.
“H100 ramps are in early stages (public cloud instances still in preview at GCP; generally available at Azure/AWS only in recent weeks), which should remain a tailwind to ASPs,” they said in a note.
However, they also reminded investors about TSMC’s recent comments about tight supply through the end of 2024.
“We believe current demand/supply imbalance will extend order visibility through 1H24, and see further upside to estimates as supply conditions ease. We believe valuation is justified given AI/ML dominance, Software/Services opportunity, and upcoming Auto inflection,” the analysts concluded.
Nvidia is due to report on Wednesday, August 23, after market close.
