Goldman Sachs analyst revises Nvidia stock price target ahead of earnings

Shares of Nvidia fell in early trading on Monday after analysts at Goldman Sachs kept the AI ​​chip maker on a key recommended stock list heading into its highly anticipated second-quarter earnings next week.

Nvidia (NVDA) shares, the market’s performance so far this year, was hit hard by global market turmoil linked to the so-called carry trade in early August, but has since posted an impressive 20% recovery amid investors’ bets that the staggered line of AI chips and processors will hold the dominant market share until 2025 and beyond.

Investors will get an updated view of that thesis next week, in fact, when Nvidia releases its second-quarter earnings and near-term outlook, focusing on the impact of reported delays to its new line of Blackwell processors, which will begin shipping . earlier this fall.

Blackwell processors have been touted as faster, cheaper and more efficient than Nvidia’s H100 “Hopper” predecessors, but could be delayed due to design flaws, according to a report from The Information earlier this month.

Analysts expected Blackwell to generate revenue for Nvidia starting in the third quarter and find its way into customers’ global data centers by the final three months of the year.

Nvidia investors will look at the impact of reported delays on its new line of Blackwell processors when it reports second-quarter earnings next week.

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Goldman Sachs analyst Toshiya Hari, who reiterated his “conviction buy” rating on Nvidia as well as his $135 price target heading into next week’s earnings update, said Nvidia’s demand story remains compelling.

Blackwell delays focus

“While the reported delay in Nvidia’s Blackwell (i.e., next-generation GPU architecture) could lead to near-term volatility in fundamentals, we expect management comments, along with supply chain data points in the coming weeks, lead to greater conviction. regarding Nvidia’s earnings power in 2025,” Hari and his team wrote.

“Importantly, we believe customer demand among large cloud service providers and enterprises is strong, and Nvidia’s robust competitive position in AI/accelerated computing remains intact,” Hari added.

Nvidia told investors in May that current-quarter revenue would rise to about $28 billion, a stronger-than-expected number that eased investor concerns about the so-called air pocket created by the launch of Blackwell , as some investors worried that customers would cancel. orders for the older H100 chips and wait for the newer system processors to ship later in the year.

Related: Big names exit Nvidia stock as AI giant stumbles ahead of earnings

For the three months ending in July, analysts see Nvidia posting adjusted earnings of 64 cents per share, with revenue rising nearly 90% from the same period last year to $25.6 billion.

“From an equity perspective, we believe the setup for Nvidia is constructive, with the stock trading at 42x (trailing twelve month) consensus EPS, or a relative premium of just 46% (to its 3-year median of 151%), and our framework updated Bull/Bear indicates a favorable risk/reward balance,” said Hari.

More AI actions:

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• Apple posts top forecasts, iPhone sales fall ahead of AI launch

Shares of Nvidia were last marked 0.02% lower in premarket trading to indicate an opening price of $124.55 each, a move that would peg the stock’s gain from just before the carry trade sale at about 16.2%.

Related: Nvidia shares fall in tech slump amid questions over key chip

The stock was also held down in early Monday trading by Advanced Micro Devices news. (AMD) The $4.9 billion acquisition of privately held server maker ZT Systems, which analysts see as expanding the chipmaker’s AI capabilities and its nascent challenge to Nvidia’s market dominance.

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