Nvidia's (NVDA) fiscal Q1 performance and Q2 forecast are expected to be similar to the previous three quarters, with an estimated 3% to 5% beat and raise, as artificial intelligence compute demand continues to outpace supply and visibility extends well into 2027, RBC Capital Markets said.
The investment firm said in a Wednesday note that it is modeling $78 billion in revenue and $1.74 in earnings per share for the April quarter, largely in line with the consensus of $78.8 billion and $1.74. Similarly, the July quarter guidance is expected to be 4% to 5% above the consensus of $86.9 billion.
RBC expects a gross margin of 75% in fiscal Q1 and Q2 with management reiterating mid-70% guidance for fiscal 2027, and believes Nvidia has largely secured high-bandwidth memory supply for the year while remaining in a relatively stronger position from a supply standpoint.
The brokerage also said hyperscaler capital spending is expected to remain healthy through 2027, with AI compute demand continuing to outpace supply.
With central processing unit demand accelerating on the back of agentic AI demand, RBC said Nvidia's Vera CPU rack is seeing solid early traction and expects management to be positive on its CPU opportunities.
RBC maintained its outperform rating, with a $250 price target.
Shares of Nvidia were up 4% in Thursday trading.
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