Analyst updates Nvidia stock price target with focus on second-quarter earnings

Shares of Nvidia rose in early trading on Tuesday ahead of its highly anticipated second-quarter earnings later this week and a key price target update from a top Wall Street analyst.

Nvidia (NVDA) shares have far outpaced gains for the broader Nasdaq benchmark over the past month, rising more than 13% from early August lows on optimism that AI demand will continue to accelerate into the back half of the year and after, even amid shipping delays and supply chain constraints for its key AI-powered chips and processors.

The group’s newly launched Blackwell line, which is expected to fuel the group’s data center revenue by up to $150 billion next year, suffers from some design flaws that could delay delivery to key Nvidia customers until later in the year of the year.

Analysts had expected Blackwell to start contributing to Nvidia’s top-line growth in the third quarter and find its way into customers’ global data centers by the final three months of the year.

Nvidia will provide a key test of the AI ​​demand story when it reports its second-quarter earnings after the close of trading on Wednesday.

Barry Lam, CEO of Quanta Computer and a key element in Nvidia’s server supply chain, said at an event in Taiwan on Monday that his company continued to ship AI servers with legacy H100 and H200 “Hopper” chips in the second quarter and see they’ve tripled… the growth in revenue this year.

Blackwell delays focus

KeyBanc Capital Markets analyst John Vinh said in a note last week that “Blackwell deliveries in the fiscal third quarter were complemented by higher Hopper bookings” and he doesn’t see the delay affecting second-quarter results or the full-term outlook short.

Wall Street forecasts point to consensus earnings of 64 cents per share, up 137% from last year, with revenue more than doubling to $28.68 billion.

Nvidia told investors in May that current-quarter revenue would rise to about $28 billion, a stronger-than-expected estimate at the time that eased investor concerns about delays in orders for H100 chips tied to of the Blackwell launch.

Related: Analysts: What you need to know before Nvidia’s earnings report this week

Truist Securities analyst William Stein said in a note on Tuesday that “fundamentals and sentiment look set to continue to improve” for Nvidia, while raising his price target for the group by $5 to $145 USD per share, while maintaining a “buy” rating. straight away.

“Our regular dialogue with component buyers and sellers has reflected Nvidia’s business trends that continue to improve,” Stein and his team wrote ahead of the tech giant’s July quarter earnings.

“This, combined with publicly available data on investment and AI adoption, leads us to raise estimates modestly,” he added, setting his full-year earnings target to $3.61 per share from $3.39 USD per share.

Cloud spending

Hyperscalers, the leading providers of massive data centers and cloud services, are poised to spend around $500 billion over the next two years to build out their massive infrastructure, according to estimates from Barclays, as they leverage their data sets to boost sales of everything from drives. through meals to the most complicated pharmaceutical tests.

Technology market analysts Canalys noted that spending on cloud infrastructure in the second quarter rose 19 percent from last year to about $78.2 billion, driven by Amazon’s investments. (AMZN) Microsoft (MSFT) and Meta Platforms (THE TARGET) .

Hyperscalers are also poised to spend about $500 billion over the next two years building out their massive infrastructure, according to estimates from Barclays.

More AI actions:

• An analyst revises price target on Microsoft shares after AI reporting change
• Analyst resets Nvidia stock price target ahead of earnings
• Analysts revise Palo Alto Networks stock price targets after earnings

“In the face of transformative tools like AI, major vendors will invest for fear of missing out,” said Canalys vice president Alex Smith. “AI relies on computing power and large-scale storage, and hyperscalers are hoping AI-powered services will become the next compelling reason for customers to move to the cloud.”

Nvidia shares were marked 0.25% higher in premarket trading to indicate a Tuesday opening price of $126.78 each, a move that would extend the stock’s six-month advance to about 61% and would value the group at about $3.11 trillion.

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