Investing.com -- UBS analysts remain bullish on Nvidia (NASDAQ:NVDA), dismissing recent market concerns as "overblown."
Despite Nvidia's stock largely treading water since its last earnings report, UBS believes the company is poised to "rise above the noise" with strong upcoming results.
Key investor concerns center around supply chain issues and the ramp-up of Blackwell server racks.
However, UBS asserts, "First, we believe Blackwell chipset/compute board yields have inflected higher, and mix in both FQ4 (Jan) and FQ1 (Apr) is shifting very rapidly to Blackwell and away from Hopper."
UBS also highlights Nvidia's revenue recognition practices, noting, "NVDA recognizes revenue when ODMs/OEMs take title of compute boards."
The bank says this is important because end customers, including major hyperscalers, are leveraging ODMs' working capital and may even be providing bridge financing for inventory.
The dynamic is said to be helping Nvidia manage through supply chain complexities.
On the hardware front, UBS acknowledges some issues but points to recent improvements, particularly with connector cartridges from primary supplier Amphenol (NYSE:APH).
UBS added that its Asia team believes further enhancements are still needed in other components, but overall, the situation is improving.
Furthermore, UBS reported that shipments of Blackwell rack systems are progressing well.
"We believe rack shipments are already underway with Hon Hai (TW:2317) (~40% share of GB200 rack-scale systems, per UBSe) confirming volume shipments of GB200 rack systems commencing in 2H of January," the note states.
Another supplier, Quanta, is expected to ramp up production by late February or March.
UBS maintains its confidence in Nvidia's financial outlook, projecting Blackwell revenue at ~$9 billion for the January quarter, up from an earlier estimate of ~$5 billion. The firm keeps its price target at $185, emphasizing, "Net, our estimates are largely unchanged."