Nvidia is expected to release first-quarter results on Wednesday showing that investments in artificial intelligence and Metaverse offerings are paying off, offsetting much of the chipmaker’s losses in semiconductor sales related to ether mining.

According to KeyBanc Capital Markets, the corporate and investment banking division, the chipmaker is one of the best-positioned companies in the semiconductor sector this year as it achieves a dominant position in generative AI and multiple new product cycles in its data center and gaming divisions by KeyCorp based in Cleveland
BUTTON
.

“We see limited competitive risks and expect Nvidia to continue to dominate one of the fastest growing cloud and enterprise workloads,” wrote John Vinh, chief executive officer and equity research analyst at KeyBanc, in a Sunday note, adding, That Omniverse, Nvidia’s platform for building and running industrial 3D metaverse applications, also represents “an emerging software subscription revenue stream that will likely support further reassessment of the multiple as it grows and scales.”

KeyBank reiterated an Outperform rating on the company’s stock and raised its price target to $375 from $320. The stocks were trade around $308 on Tuesday afternoon. .

Matt Bryson, an analyst at Wedbush Securities, gave the stock a neutral rating with a more conservative price target of $290 (down from $216), but agreed that “AI demand looks set to strengthen Nvidia for at least the next 12 months will provide a tailwind”. There is “no fundamental stumbling block for the stock”.

In his view, investors should instead focus on what longer-term opportunities Nvidia offers in artificial intelligence — for example, what efficiencies it can achieve that translate staff savings into IT spend — and what multiples the company is making.

Wall Street analysts expect Nvidia’s first-quarter revenue to come in at $6.5 billion, down 22% from $8.3 billion a year earlier, with earnings per share of 92 cents, down 17% from $1.11, according to Bloomberg. Net income is expected to be $2.2 billion compared to $2.8 billion last May.

The declines reflect lost revenue from sales of graphics processors, a type of semiconductor used to mine ether. The Ethereum
ETH
Switching the network to an energy-efficient business model has wiped out most of that power. Aware that it would lose revenue from cryptocurrency mining, Nvidia decided to focus its technology on the now-booming Metaverse-enabled software and artificial intelligence markets that take advantage of its graphics-oriented semiconductors.

The bet seems to be paying off. The boom in artificial intelligence, fueled by OpenAI’s chatbot ChatGPT, has skyrocketed demand for GPUs. In conjunction with the US ban on selling AI chips to China, major Chinese companies like Baidu
BIDU
buy up Nvidia’s AI GPUs, DigiTimes reported.

In March, Nvidia announced one Alliance with Microsoft
MSFT
The company is focused on bringing the industrial metaverse and AI to enterprises via the Azure cloud computing platform. In the announcement, Nvidia CEO Jensen Huang reiterated that his goal is to bring new AI, simulation and collaboration capabilities to every industry.