03:35 PM EDT, 08/20/2024 (MT Newswires) -- Nvidia ( NVDA ) could see upside to its latest quarterly financial results and guidance amid "sustained" artificial intelligence demand among cloud service providers and enterprises, Oppenheimer said Tuesday.

The technology giant is scheduled to report its fiscal second-quarter results Aug. 28. Oppenheimer projects non-GAAP earnings at $0.62 a share on net sales expected to more than double at $28.04 billion. Analysts polled by Capital IQ are looking for $0.64 and $28.59 billion, respectively.

"Lead times have normalized, though supply remains tight, gated by advanced packaging capacity," Oppenheimer analysts Rick Schafer, Wei Mok and Dustin Fowler said in a note to clients. The company's B100 chip is expected to see low-volume market introduction in the fourth quarter, with "meaningful ramp" likely in the following quarter, the analysts said, adding that its Hopper graphics processing unit is likely to fill demand in the interim.

Nvidia's ( NVDA ) NVL36 and NVL72 racks give it additional edge over competitors, according to the note. The analysts expect mix to initially favor NVL36 over NVL72 as it "best accommodates" existing data center infrastructure.

The company's data center business is expected to see strong growth in the second quarter led by its H100 GPU, with contribution from H200 expected in the ongoing three-month period, according to the note. The brokerage expects "durable" InfiniBand share gains in the near term.

Nvidia ( NVDA ) shares were down 1.9% in Tuesday late-afternoon trade, but are up more than 150% so far this year amid the AI boom.

The company's RTX platform is expected to drive second-quarter performance in its gaming segment, with channel inventory levels seen as "healthy," the trio said. Nvidia's ( NVDA ) next-generation Tegra GPU is likely designed into the upcoming Nintendo Switch 2, due in the first half of 2025, they added.

Oppenheimer increased its adjusted EPS outlook to $2.70 from $2.62 for fiscal 2025 and to $3.77 from $3.32 for fiscal 2026. The brokerage raised its 2027 estimate to $4.43 from $4.11. The upgraded guidance takes into account an improved supply situation, according to the note.

The analysts said they see Nvidia ( NVDA ) as "best positioned" in AI. The company has the "best-in-group" operating and gross margin profile, they added. The brokerage reiterated its outperform rating and a $150 price target on the stock. "We remain long-term buyers," the trio wrote.

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