Investing.com — NVIDIA Corporation (NASDAQ:) has wobbled since its third-quarter guidance underwhelmed lofty investor expectations, but analysts from Jefferies are “increasingly convinced the stock is setup well into 2025, citing red-hot demand for the chipmaker’s chips.
“With another couple days to digest the print and speak with investors, we’re increasingly convinced the stock is setup well into 2025,” Jefferies analysts said in a recent note following Nvidia’s Q3 results released on Nov. 20.
Nvidia reported a beat on both the top and bottom lines, but its slightly better-than-expected revenue guidance for Q4 underwhelmed lofty investor expectations heading into the print.
The chipmaker, however, signaled that demand for its chips, particularly its soon to be launched Blackwell chips would outpace supply for several quarters.
Demand for Nvidia’s Hopper architecture, however, is still likely to remain resilient through the first half of 2025, the analysts said. While the new Blackwell architecture set to outpace supply well into the second half of 2025, potentially stretching into 2026.
At the recent SuperCompute conference SC24, Jefferies observed that demand for Nvidia’s chips was similar to 2023, with only lead customers and ODMs getting product.
They noted that average selling prices scaled up with volumes not down, and “everyone else waiting in line for when they could purchase.”
Jefferies also pointed out interesting dynamics at SC24, noting that only a handful of ODMs had Nvidia’s GB200 systems, which are likely to complete verification by early December, on display, while others had empty racks, suggesting not everyone is getting Blackwell chips in the early months.
“We had argued that NVDA would sell more boards than racks but the first 6 months seems to be full NVDA reference designs,” the analysts added.
Reports of Nvidia’s Blackwell chips experiencing overheating, first reported by the Information over the weekend, “did not seem to be a problem, suggesting the report was likely “referencing prior issues and foots with reports that MPWR is likely out of the GB200 with IFX picking up the incremental share.”
The analysts highlighted that while investors will eventually start thinking about growth expectations for 2026, the focus for the next 6-9 months will likely be on the level of upside possible for Nvidia.
Despite recent commentary suggesting diminishing returns in scaling laws for large language models, or LLMs, Jefferies doesn’t expect this to pose any near-term risk for Nvidia demand.
Expectations for a December or January release of Elon Musk’s xAI’s Grok-3 LLM will be something to watch, the analysts said.”Should Grok-3 show gains, we expect this could reignite AI Animal Spirits.”
While investors will eventually start thinking about what sort of growth to expect for Nvidia in 2026, for “the next 6-9 months we believe the focus will be on the level of upside possible,” they added.
