How Nvidia stacks up against major chip peers ahead of earnings

Nvidia's upcoming earnings report on Wednesday is facing challenges as its stock has fallen in six of the past eight quarters, including the last four. Despite CEO Jensen Huang's bullish outlook, the market expects strong results and super bullish statements from the CEO. Nevertheless, the market believes Nvidia's investment portfolio will remain strong, given the high valuations of most private AI firms.

UBS analyst Tim Arcuri believes the numbers will be more important than the narrative, projecting $15+ EPS in 2027 and $20 in 2028, which should encourage investors to maintain confidence in Nvidia's future. However, HSBC analyst Frank Lee suggests that a significant re-rating of Nvidia's stock may require a new narrative, such as the company becoming the world's largest contributor to open-source AI.

Open-source small language models (SLMs) could expand Nvidia's total addressable market (TAM) and lower the barrier to entry for enterprise inference, potentially boosting earnings.