Nvidia faces high market expectations: Daniel Steck’s analysis

Ahead of Nvidia’s quarterly results on Wednesday, Daniel Steck, Head of Equity Research at Piguet Galland, was interviewed by Swiss daily Blick about market expectations surrounding the US semiconductor giant.

Expectations were particularly high, investment in artificial intelligence remained substantial, and one key question stood out: is beating consensus estimates still enough to satisfy investors?

Expectations well beyond consensus

Ahead of the results, consensus estimates pointed to revenue of close to USD 92 billion, representing growth of around 15% compared with the previous quarter. However, according to Daniel Steck, simply reaching this level was unlikely to be enough to satisfy investors.

Nvidia had beaten market expectations for the previous fourteen consecutive quarters. This consistent outperformance had gradually raised the bar: several analysts were expecting revenue closer to USD 95 billion, while a figure approaching USD 100 billion might have been needed to trigger a clearly positive reaction in the share price.

This illustrates a paradox: when expectations are already exceptionally high, beating consensus estimates no longer necessarily guarantees a positive market reaction.

Beyond the numbers: the momentum behind AI

Daniel Steck also highlighted the importance of Nvidia’s outlook and any indications regarding its order backlog.

Large technology companies – the hyperscalers – continue to invest heavily in the infrastructure required to support the development of artificial intelligence. Their capital expenditure therefore provides an important indicator of demand for Nvidia’s products and, more broadly, for the semiconductor sector.

According to Daniel Steck, strong results could temporarily reassure investors about the continuation of the AI investment cycle. However, another issue is becoming increasingly important: how these investments will be financed, particularly in an environment where borrowing costs remain high.

An issue that extends beyond Nvidia

Nvidia’s results were therefore being closely watched for reasons extending well beyond the company’s own share price. They represented another important test for AI-related stocks as a whole.

Demand for infrastructure, computing power and components remains considerable. As Nvidia cannot meet all of this demand on its own, the current momentum could continue to benefit a broader range of companies across the semiconductor sector.

The question now is how long this growth can continue to meet increasingly demanding market expectations.

Read Daniel Steck’s contribution in Blick (available in German only).