Visible Alpha Technology

Nvidia Corp. (NASDAQ: NVDA) hosted GTC (GPU Technology Conference) 2025, the company’s major AI conference for developers, in mid-March. Here are some of our key observations post-GTC.

Q1 revenue estimates move higher

Since last quarter’s earnings release, estimates for the B-series chips have moved around 15% higher for Q1 2026, driven by the outlook for Blackwell provided in both the earnings release and CEO Jensen Huang’s comments at GTC. Huang highlighted how the demand for Blackwell continues to be very strong. This optimism around the B-series chips is captured in the Data Center revenues, which have increased in tandem with the Q1 B-series expectations. However, expectations from Q2 have come down as uncertainty remains around the macro environment and the actual cadence of the ramp for Blackwell for the rest of FY 2026. In addition, even though revenues have been moving higher for Q1, gross profit has remained flat on the back of the muted margin guidance the company gave for the first half. Beyond Q1 Data Center revenues, questions seem to remain about the trajectory of B-series revenue growth and the Data Center margins.

From January 1, 2023 to March 26, 2025, CY 2025 – CY 2026 aggregated Visible Alpha consensus expectations for Data Center revenues have been revised up a massive $370 billion. Despite the significant upward revisions from January 2023 to January 2024, numbers continued to move through CY 2024 and Q1 2025. There are questions about whether or not the Data Center business segment will continue to see further upward revisions.

According to Huang, Cloud Service Providers (CSP) are continuing to drive significant demand for Blackwell, because it supports faster inference speeds and model training but uses less energy. He also pointed out that demand is coming from sources beyond the CSPs, which may imply that the total addressable market (TAM) is increasing. While the Data Center revenue expectations have continued to increase significantly, it has been challenging for investors to grasp the magnitude of the TAM. Last year at GTC, Data Center revenue estimates were already taken up $250 billion in aggregate. However, they have moved an additional $120 billion for CY 2025 and CY 2026. Given the strength of demand for Blackwell, there are questions around the optimal amount of capacity and spend for innovation to happen at-scale with AI, especially given how much DeepSeek accomplishes at a much lower cost.

Nvidia Blackwell demand from CSPs

Source: Nvidia GTC keynote with CEO Jensen Huang (March 18, 2025)

While there has been significant innovation in the chip and model, there has not been much at the application layer. The more tokens generated, the smarter the AI, but these tokens can be very expensive. Ultimately, the high costs have been a barrier to innovation for finding ways to fully monetize end-users. Additionally, high costs have been an obstacle for inferencing at scale. Reducing the costs could be the gateway to seeing business models emerge and finally driving ROI and revenue generation. In his presentation at GTC, Huang addresses the challenges for the business case. According to Huang, “Blackwell is a giant leap in Inference Performance”. Will Blackwell’s performance improvements remove some of the barriers to innovation and monetization and serve as a catalyst for AI applications and new business models to emerge?

Inferencing at-scale

Source: Nvidia GTC keynote with CEO Jensen Huang (March 18, 2025)

AI at the Edge

This year, Huang emphasized the importance of Edge computing solutions, which can enable data-processing and decision-making in real-time, because it is closer to the actual source of the data. Autonomous vehicles, AI-enhanced laptops and smartphones represent potential areas for the two companies as Edge AI computing continues to expand.

CEO Jensen Huang highlighting the Edge

Source: Nvidia GTC keynote with CEO Jensen Huang (March 18, 2025)

Focus on autonomous driving

According to Huang, accelerated computing and Generative AI are going to move the world closer to autonomous driving. He emphasized larger models and better performance. With foreign auto tariffs looming, this may be an opportunity for US automakers to capture significant share in autonomous vehicles by creating a pricing advantage.

The move to accelerated computing is laying the groundwork and positioning the auto industry to scale innovative solutions in manufacturing. Omniverse Digital Twins will be able to simulate real world experiences and solutions that can help automotive manufacturers reduce risk and cost, while improving efficiency and creativity. The Omniverse enables everything to be manufactured digitally first.

CEO Jensen Huang highlights Nvidia Halos

Source: Nvidia GTC keynote with CEO Jensen Huang (March 18, 2025)

Longer-term, going higher?

For FY 2026, the range of estimates remains substantial for the B-series and implies that there is significant debate about Nvidia’s growth outlook and whether the company will deliver its AI revolution dream. Based on Visible Alpha consensus, the B-series, which includes B100, B200, B300 GPUs based on Blackwell architecture, is expected to generate revenues of $66.9 billion in FY 2026. The top-end estimate is currently at $128.0 billion, while the low-end estimate is at $35.0 billion for B-series revenue. Clarity around the revenue growth for the B-series will likely be a key aspect to the valuation this year and next.

Non-GAAP diluted consensus EPS for FY 2026 is now projected to be $4.60/share, but ranges from $5.83/share to $4.22/share, with the consensus P/E at 24x, ranging from 26x to 19x. NVDA stock is down over 17% since the late February earnings release, due to macro uncertainty around tariffs and concerns the capex spend and expectations may be getting stretched. Will the B-series drive the Data Center business to beat expectations in FY 2026 and FY 2027 and continue to drive upside in the stock or have expectations gone too high?

Snowflake Inc. (NYSE: SNOW) will report fiscal Q4 2025 results on Wednesday, February 26, 2025. Here are the key numbers that we’re watching.

Snowflake – Consensus Expectations for Q4 2025, Past Earnings Surprises, Revisions, and CAGR

Source: Visible Alpha consensus (February 21, 2025). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date.

Snowflake Q4 2025 Earnings Preview

According to Visible Alpha consensus, total revenues of $914 million and operating income of $30 million are expected for Q4 2025. Operating profit expectations for the Q4 have moved up more than 10% from $5 million in August to now $42 million. However, these estimates are still lower than the initial estimates in January 2024. While expectations have come down for FY 2025, overall growth continues to be driven by the strength of Snowflake’s data platform and the potential network effects of moving more data there. The company made several AI-related announcements at its Build conference. It will be interesting to hear the company’s commentary on the FY 2026 outlook for their AI-related products in the earnings call.

Currently, there is debate about the gross margin performance. Based on Visible Alpha consensus, the non-GAAP gross margin estimates range from 74% to 77% for Q4 2025. For FY 2026, Visible Alpha consensus for gross margin has moved up to 76% from 75% in the August quarter but is still below the 77% previously expected at the beginning of FY 2025

The stock was a significant underperformer for most of last year, but since last quarter is up a strong 43% on an improved revenue and profit outlook. Could the Q4 release provide another positive catalyst for the stock into FY 2026?

Snowflake Revisions

Source: Visible Alpha consensus (February 21, 2025). Stock price data courtesy of S&P Global. Snowflake’s current stock price is as of the market close on February 20, 2025.

Big Tech companies — Netflix (NASDAQ: NFLX), Alphabet (NASDAQ: GOOGL), Meta (NASDAQ: META), Amazon (NASDAQ: AMZN), and Apple (NASDAQ: AAPL) — reported their latest earnings. Here’s a recap of those earnings, some key takeaways, and the resulting shifts in analysts’ estimates, according to Visible Alpha consensus.

Summary of Earnings

For the mega-cap tech companies, this earnings season has once again been dominated by mixed results around the core businesses and investing in the technology infrastructure to support generative AI (GAI). The dynamics of juggling talent and investment in multiple layers of the stack have added complexity to the business fundamentals. The mega-cap firms are all, in their own way, enhancing aspects of infrastructure, and supporting an environment for creating new GAI apps.  While the output for OpEx growth expectations have decreased, the much stronger pace of expected CapEx has caused some concern. The significant ramp in CapEx spending is projected to grow faster than revenues.

When will revenue growth begin to expand as rapidly as expenses?

CapEx and OpEx Snapshot

Source: Visible Alpha consensus (February 13, 2025). Note: Microsoft recast segments causing model changes.

Netflix

Netflix beat expectations in a few key areas, leading to stock price outperformance since the earnings release. At Netflix, while Q4 was solid, the FY 2025 guidance came in above consensus, driving the stock price up over 20% since the release.

Netflix Inc. (NASDAQ: NFLX) reported Q4 2024 results on Tuesday, January 21, 2025. Q4 revenue of $10.2 billion was slightly ahead of consensus estimates, driven by healthy engagement, net adds and slate outperformance. The ads plan accounted for over 55% of sign-ups in ads’ countries. Netflix noted on the earnings call that it has seen membership on the ads plan increase 30% quarter-over-quarter. The company also noted that there has been no impact from the LA fires, but that the strong dollar is an ongoing headwind.

The UCan market saw 15% year-over-year revenue growth. In addition, APAC and EMEA showed strong double-digit increases on the back of prices increases. Latam revenue was up 6% and also absorbed price increases. Netflix delivered a Q4 operating profit of $2.3 billion and a 22.2% operating profit margin, ahead of consensus estimates coming into the quarter.

The Outlook

The company guided Q1 to 10% year-over-year growth with revenue expected to be above $10 billion, in line with consensus. Revenues are expected to be supported by continued new membership and monetization. Offering a range of pricing and plans combined with continuing growth in the ads business is expected to further increase monetization. The operating margin is expected to be 28.5%.

The company expects to grow revenues to $43-44 billion by increasing engagement trends and reducing churn with a more diverse entertainment offering. Gaming and the growth of ads could be key drivers in 2025. According to consensus, analysts now expect the company to generate a 29.1% margin, up from 28.3% previously estimated, on expected revenue of $44.3 billion and $12.9 billion in operating profit in FY 2025.

Management highlighted that the Ad Tier enables lower prices. The Company stated in the earnings call that they expect that ads revenue will roughly double year-over-year again in FY 2025. Netflix remains upbeat about the long-term opportunity, given the size of its user base. The company explained that 2025 will be the year that the ads business “will transition from crawl to walk”. Currently, consensus projects total ad-supported revenue to expand to nearly $9 billion, up from $7.5 billion, by the end of FY 2027, up 5x from FY 2024 of $1.8 billion. There is a significant range of views on the magnitude of this growth. For FY 2027, analyst estimates range from $3.5 billion to $17.0 billion.

Based on Visible Alpha consensus, the operating profit margin is expected to grow from 26.7% in FY 2024 to 33.7% in FY 2027. Currently, consensus estimates the operating margin to surpass 31% in FY 2026, and for this to exceed 33% by the end of FY 2027. There is significant debate among analysts with respect to FY 2027 margin estimates, which range from 31% to 36%. This margin growth is expected to take FY 2024 expected diluted EPS from $19.83/share to $36.79/share or 29x FY 2027 P/E and a consensus target price of $1105.

Netflix Consensus Revisions

Source: Visible Alpha consensus (February 18, 2025). Stock price data courtesy of S&P Global. NFLX’s current stock price is as of the market close on February 14, 2025.

Netflix Consensus Estimates

Source: Visible Alpha consensus (February 14, 2025)

Alphabet

Total revenues of $96.5 billion exceeded consensus expectations, driven by resilience in its search business. However, the Q4 operating profit margin of 31.5% and EPS of $2.15/share were in line with consensus, a slight disappointment from the top-end estimates.

We have been closely monitoring the trend of the Cloud business. Cloud revenue of $11.9 billion in Q4 was disappointing, coming in slightly below consensus. The operating profit margin has been trending better. Analysts expected the Cloud business to generate a 16.2% operating profit margin in Q4, but the company exceeded consensus by reporting a 17.5% margin.

The Outlook

For Q1 2025, Management called out the impact of a strong dollar and leap year. Expected Q1 revenue of $89 billion and EPS of $2.00 has been stable since last fall.

FY 2025, the Cloud business is projected to generate revenue of $55 billion and an operating profit margin of over 17%, up from a 16.5% margin expectation prior to the earnings release. Questions remain about both the revenue growth and profitability of the Cloud business and if the cloud margin will continue its expansion over the next few years. In addition, the losses from its Unallocated and Other Bets are expected to persist.

Longer-term, the consensus Cloud margin is estimated to generate a 20% margin by the end of FY 2027, with operating profit ranging from $12.6 billion to $21.7 billion.

CapEx has continued to increase reflecting investment in servers, data centers, and networking equipment. For 2025, the company guided CapEx to be $75 billion, up from $52.5 billion in FY 2024, an increase of over $20 billion year-over-year and significantly ahead of consensus of $58.7 billion.

Alphabet stock has traded down 10% since last quarter’s release and 34.5% from January 2024, slightly outperforming the S&P 500’s return. The consensus P/E for FY 2025 is 21x and 16x for FY 2027.

Alphabet Revisions

Source: Visible Alpha consensus (February 18, 2025). Stock price data courtesy of S&P Global. GOOGL’s current stock price is as of the market close on February 14, 2025.

Alphabet Consensus Estimates

Source: Visible Alpha consensus (February 18, 2025). Stock price data courtesy of S&P Global. GOOGL’s current stock price is as of the market close on February 14, 2025.

Meta Platforms

According to Visible Alpha consensus, total revenues for Q4 were slightly ahead of expectations at $48.4 billion, driven by solid performance in the Family of Apps segment, especially in the U.S. and Europe. However, operating profit exceeded expectations by over $3 billion at $23.4 billion, driven by resilience in the Family of Apps and that were in line with consensus for Reality Labs.

The Outlook

The company’s revenue outlook for Q1 was in line with expectations. Consensus now expects the Q1 operating profit to be $15.4 billion, driven by higher expected profitability at the Family of Apps. Since the earnings release, the operating profit for the Family of Apps has increased by close to $1 billion.

For 2025, post-earnings expectations for operating income from the Family of Apps have increased over $2.2 billion to $94.5 billion since the quarter, driven by higher ad revenue per DAU in the US and EU. In addition, the projected losses from Reality Labs for 2025 have also increased.

In addition, CEO Mark Zuckerberg highlighted that the company would continue to invest in servers and data centers to support AI, because it is expected to drive marketing and customer engagement across the Family of Apps. CapEx guidance of $60-$65 billion was above consensus of $50.7 billion.

META stock has been an outperformer since last year, up 9% since the release and over 110% since January 2024. The consensus P/E for FY 2026 is 25x and the consensus target price is $768. Will Meta remain disciplined in FY 2025 and continue to be an outperformer?

Meta Platforms Revisions

Source: Visible Alpha consensus (February 18, 2025). Stock price data courtesy of S&P Global. META’s current stock price is as of the market close on February 14, 2025.

Meta Platforms Consensus Estimates

Source: Visible Alpha consensus (February 18, 2025). Stock price data courtesy of S&P Global. META’s current stock price is as of the market close on February 14, 2025.

Amazon

Total revenues of $187.8 billion for Q4 were $1.4 billion above consensus, driven by higher revenues in North America and International retail. The North America segment generated $115.6 billion in revenue, ahead of consensus by $1.3 billion, making up most of the top-line surprise. Revenues from Advertising and AWS were in line with consensus, which was disappointing.

The North American retail operating margin increased to 8.0%, exceeding the 6.7% expected by consensus. This margin expansion was driven by improvement to their fulfillment network cost structure and inventory placement. Similarly in the international segment, the operating margin hit 3.0%, better than expectations ahead of the release. Looking further out, consensus expects the North America margin to be 7% and the International margin to remain at 3% by the end of FY 2025.

AWS delivered mixed results. The revenue of $28.8 billion was in line, but the margin came in strong at 36.8% in Q4, ahead of the consensus estimate of 33.2%. For 2025, analysts are now expecting a 34.8% margin, down from 35.2%. The company expects AWS growth to continue, driven by high demand for GAI.

The Outlook

The company guided to Q1 revenue of $151-155.5 billion, below the consensus of $158.6 billion, and to an operating profit of $14-18 billion, which was slightly below the $18.3 billion expected. Since the release, Q1 and FY 2025 consensus total revenue have pulled back.

To support Amazon’s growing need for technology infrastructure, CapEx will continue to increase further in FY 2025. CapEx is projected to increase in 2025 to $106 billion, up significantly from $52 billion in 2023.

The stock traded down 3.8% since the Q4 release but is up 52.5% since last January 2024. The consensus P/E for FY 2026 is 30x and the consensus target price is $270.

Amazon Revisions

Source: Visible Alpha consensus (February 18, 2025). Stock price data courtesy of S&P Global. AMZN’s current stock price is as of the market close on February 14, 2025.

Amazon Consensus Estimates

Source: Visible Alpha consensus (February 18, 2025). Stock price data courtesy of S&P Global. AMZN’s current stock price is as of the market close on February 14, 2025.

Apple

Total revenues of $124.3 billion for Q1 were in line with Visible Alpha consensus. Revenues of $69.1 billion from iPhone in Q1 were flat year-over-year. China continues to underperform and was down 11% this quarter, below the 2% growth expected by consensus.

Overall full-year iPhone revenue expectations of $202.6 billion have been moving down since last year, suggesting increased pessimism in the market about the potential upgrade cycle. Currently, Q2 is expected to deliver $45.7 billion in iPhone sales, a $1.5 billion decrease since the earnings release.

While iPhone sentiment has declined, expectations for the high-margin Services segment have increased, enabling the estimated total operating profit to remain consistent. In Q1, the Services segment delivered $26.3 billion, beating consensus. Gross margin for the Services segment was 75.0%, above the 74.1% expected. The 39.3% gross margin for Products was in line with expectations. The company said that it continues to see increased customer engagement, with the Apple ecosystem supporting the future growth of the Services business. Based on consensus, Services is expected to hit $120.1 billion at the end of FY 2026, up $24 billion from FY 2024’s $96.2 billion.

Vision Pro delivered another set of results this quarter, slightly below expectations. For the FY 2025, consensus revenue estimates for the Vision Pro have declined to $1.0 billion from a previously estimated $1.2 billion.

The stock has traded down 5.2% since the Q1 release, and is up 21.8% since January 2024[HP1] , underperforming the S&P 500. The consensus P/E for FY 2026 is 30x and the consensus target price is $253. Will users start to get excited about Apple Intelligence and drive iPhone upgrades that exceed expectations in FY 2025?

Apple Revisions

Source: Visible Alpha consensus (February 18, 2025). Stock price data courtesy of S&P Global. AAPL’s current stock price is as of the market close on February 14, 2025.

Apple Consensus Estimates

Source: Visible Alpha consensus (February 18, 2025). Stock price data courtesy of S&P Global. AAPL’s current stock price is as of the market close on February 14, 2025.