Nvidia (NVDA) remains well positioned for continued earnings growth despite investor concerns about competition and margins, UBS Securities said in a report Thursday.
Nvidia's fiscal Q1 revenue of about $81.6 billion topped both UBS estimates and Wall Street expectations, driven primarily by strength in the data center "networking segment." The firm also noted that Q2 revenue guidance of about $91 billion at the midpoint was above Wall Street expectations and broadly in line with investor forecasts, according to the report.
Nvidia is strengthening its competitive position in the "evolving agentic world" through customized solutions and its "Vera CPU" platform, the brokerage noted, highlighting a new disclosure that standalone Vera CPU could generate about $20 billion in revenue this year and expand Nvidia's addressable market by roughly $200 billion.
UBS also highlighted Nvidia's increased capital returns, including an additional $80 billion share repurchase authorization and a dividend increase to $0.25 per share from $0.01, while noting the company remains "confident" it can sustain gross margins in the mid-70% range despite rising high-bandwidth memory costs next year, according to the report.
UBS maintained a buy rating on Nvidia and raised its price target to $280 from $275.
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