Analysts revise Nvidia stock price targets after Q2 earnings

Shares of Nvidia fell in early trading on Thursday but pared their worst post-earnings declines as a host of Wall Street analysts rushed to update the AI ​​chip maker’s ratings and price targets following its much-anticipated update in July quarter.

Nvidia (NVDA) which owns a dominant leader in the production of chips and processors that power AI systems around the world, reported record revenues of $30.04 billion for the second fiscal quarter and saw profits more than double from the same period last year , up to 68 cents per share.

The group also suggested that current quarter revenue would continue to improve, albeit at a slower pace, and forecast a top number of $32.5 billion, despite delays in the delivery of its new line of Blackwell processors due to design changes and supply chain pitfalls. .

Nvidia said it executed a “modification of the Blackwell (graphics processing unit) mask to improve production yield,” adding that the ramp is “scheduled to begin in the fourth quarter and continue into fiscal 2026.”

“We are sampling working samples of Blackwell, Grace Blackwell and a variety of system configurations as we speak,” Nvidia CEO Jensen Huang told investors on a conference call late Wednesday. “There are something like 100 different types of systems based on Blackwell, and we’re allowing our ecosystem to start sampling them.”

Nvidia CEO Jensen Huang said demand for its new line of Blackwell GPUs is “incredible.”

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“Blackwell’s functionality is as is and we expect to start shipping in Q4,” he added, noting that demand for Nvidia’s Hopper chips is “very strong” and appetite for Blackwell “incredible.”

Blackwell Revenue Growth

Chief Financial Officer Colette Kress said Blackwell should generate “a few billion” in revenue for Nvidia’s fiscal fourth quarter, which ends in January, while adding that Hopper sales will accelerate in the second half of the year.

That proved important to investors who worried the Blackwell launch would trigger some backlog of Hopper orders as customers waited for new processors and more powerful systems to hit the market.

Related: Nvidia posts top-line earnings, but Blackwell delay signal hits stock

Still, the Blackwell ramp will likely hurt Nvidia’s profit margins, which narrowed modestly to 75.7% in the second quarter and are likely to settle at 75% in the near term.

“Despite lower-than-expected gross margin indications, the revenue opportunity for Nvidia’s cloud data center, consumer Internet and enterprise customers remains strong,” said Goldman Sachs analyst Toshiya Hari, who reiterated his “buy” rating convinced” and $135 price target for Nvidia. stock following last night’s earnings surge.

“With a Blackwell GPU redesign, management expects several billion dollars in revenue in FY4T, supported by growing Hopper revenue,” he added.

Blackwell “nothing burger”

JPMorgan analyst Harlan Sur had a similar view, noting that the two-month delay in Blackwell GPU shipments should not affect Nvidia’s overall revenue profile, given that it is “offset by Hopper’s strong performance.”

“We expect gross margins to improve over the next year, with Nvidia maintaining a strong lead over competitors with an aggressive product release cadence,” said Hur, who added $40 to Nvidia’s price target, taking it to $155 per share.

Related: Nvidia Share Price Tied to 5 Keys in Q2 Earnings Report

Cantor Fitzgerald analyst CJ Muse, who reiterated his $175 price target and “overweight” rating on Nvidia shares, said concerns about Blackwell’s delay “seem like a nothing burger before one of the biggest and baddest product cycles in Nvidia’s history”.

“We don’t see any change in Nvidia’s underlying AI story, and we think (today’s) potential pullback is simply another buying opportunity,” he added.

That view was echoed by Piper Sandler analyst Harsh Kumar, who also maintained his $140 price target and “overweight” rating after last night’s earnings update.

“The company is well positioned to capitalize on the strong demand for AI with Hopper and Blackwell,” Kumar said. “Gross margins are expected to stabilize, supporting continued growth.”

Nvidia’s expectations remain high

Bernstein SocGen Group analyst Stacy Rasgon, who raised his price target on Nvidia by $25 to $150 a share, said the group “continues to deliver on high expectations with strong data center growth and with several billion dollars of Blackwell’s revenue expected in Q4”.

“Demand for hoppers remains strong and we anticipate significant growth next year, driven by diversified customers and expanded AI opportunities,” he added.

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Edward Jones analyst Logan Purk, who reiterated his “hold rating on Nvidia”, said that while the group “remains the leader in high-performance GPUs and has a 90% market share in data centers for accelerator chips,” it will be a challenge for management to continually exceed expectations.

“We believe the stock appropriately reflects our optimistic growth outlook and is appropriately valued,” Purk said.

Shares of Nvidia were marked down 3.9% in pre-market trading, with more than 9.8 million shares changing hands, to indicate an opening price of $120.74 each.

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