NVIDIA still a buy after share price fall as “bullish” outlook intact — UBS
NVIDIA dips despite another blockbuster result. UBS says the AI boom is accelerating — and investors may regret not buying the dip.
Source: Shutterstock
KEY POINTS
- NVIDIA has been the undisputed leader of the AI revolution, delivering relentless earnings beats and share price gains as demand for its chips powers the global data centre buildout.
- But the latest result broke the pattern: despite another strong beat and bullish outlook, the share price fell sharply, raising questions about valuation, expectations, and what’s priced in.
- We break down UBS’s latest call to explain what really drove the sell—off — and why the investment bank believes this dip could be a buying opportunity.
NVIDIA (NYSE: NVDA) delivered another strong quarterly result, beating on both revenue and earnings, with guidance and demand commentary reinforcing its dominance in AI infrastructure. Yet despite the headline strength — and typically bullish messaging from CEO Jensen Huang — the stock failed to rally, trading flat in the aftermarket before falling more than 5% on Thursday.
The muted response appears less about the quality of the result, and more about expectations. With NVIDIA already priced for near—perfection, even a clear beat may not have been enough to satisfy a market increasingly focused on what comes next — particularly around margins, accounting changes, and the sustainability of growth.
UBS’s latest research suggests the sell—off may be misplaced. While near—term earnings adjustments have weighed on sentiment, the broker argues the underlying demand story remains intact — and, if anything, continues to strengthen.
Key data and company outlook commentary
NVIDIA reported FQ4 revenue of approximately $68.1 billion, ahead of both UBS and consensus estimates, with non—GAAP EPS of $1.62 billion also beating.
Data centre revenue: $62.3 billion (strong beat), driven by ongoing AI demand
Networking: materially ahead of expectations, benefiting from NVLink ramp up
Gaming: broadly in line, but slightly below Street estimates
Professional visualisation: significantly ahead of estimates
Guidance:
FQ1 revenue guidance: $78 billion midpoint (above estimates)
Gross margin: ~75%, consistent with prior commentary
Operating expenses: ~$7.5 billion, including stock—based compensation
Broader outlook:
Revenue expected to grow sequentially through FY27
Gross margins to remain in the mid—70% range
Data centre continues to dominate, with Blackwell systems driving the majority of shipments
Sharp increase in supply commitments and inventory, suggesting capacity is being built to support potential quarterly revenue approaching $100 billion in coming periods.
Expert views — UBS
Key takeaways
UBS’s central takeaway is unequivocal: demand for NVIDIA’s products remains extraordinarily strong, with visibility extending years into the future. As the broker puts it, “demand commentary was as bullish as we have probably ever heard from the company with a backlog now building into C2027.”
This reinforces the view that AI infrastructure spending is not just robust — it’s accelerating — with hyperscalers and sovereign buyers continuing to commit capital at scale.
Despite this strength, UBS flags a key disconnect between fundamentals and market reaction. The stock’s muted response appears linked to accounting changes and near—term EPS adjustments, rather than any deterioration in demand. Importantly, UBS believes this won’t last, noting: “it is hard to see how the stock continues to languish” given the expected re—acceleration in year—on—year growth into the second half of 2026.
Beyond the headline numbers, UBS highlights several supporting dynamics reinforcing its constructive view:
Supply build suggests capacity for ~$100 billion of quarterly revenue in coming periods
Networking growth is accelerating alongside compute demand
Sovereign AI revenue has surged, reflecting global infrastructure buildout
Free cash flow generation could drive a step—up in share buybacks
Rating and price target
UBS maintains a Buy rating on NVIDIA with an unchanged price target of $245.
While near—term EPS has been trimmed due to accounting changes, the broker has lifted longer—term earnings forecasts, reflecting stronger data centre assumptions and continued AI—driven demand.
The key call: fundamentals remain exceptionally strong — and the next leg of upside may depend on growth re—acceleration becoming more visible in reported numbers.
