Wall Street had expected Nvidia’s stock to fall ahead of the company’s Q2 update. Here’s what analysts think now.

By most standards, Nvidia (NASDAQ: NVDA) hit the ball out of the park with its fiscal 2025 second quarter results. The company reported record revenue of $30 billion, up 122% year over year. It recorded revenues that increased by 168% compared to the previous year period. Nvidia guides projected even higher revenue for next quarter.

And yet the stock sank after these stellar numbers. Although Nvidia beat Wall Street estimates, the GPU maker missed the “whisper” earnings number, which was higher than the consensus estimate of public analysts.

Wall Street was predicting Nvidia stock to drop even before the Q2 update. Here’s what analysts think now.

Bears or bear bears

Before I get to current analyst thinking about Nvidia, let me assure you that I don’t see any of them as having Nostradamus-like predictive powers. Wall Street’s average price target for Nvidia before the company’s Q2 update was about 2% below its closing price before the earnings release. However, this was a 12 months target price. Nvidia fell more than that almost immediately the day after the Q2 announcement.

Importantly, most Wall Street analysts weren’t all that negative about Nvidia. Of the 38 analysts surveyed by LSEG on August 14 rated Nvidia as a “buy”. Another seven recommended the stock as a “strong buy.” This is a majority (55%) with positive views of Nvidia. Most other analysts — 14 of them — rated the stock a “hold.” Only two assigned Nvidia a negative “underperform” or “sell” rating.

But the average price target still reflected an expectation that the stock would decline over the next 12 months. I describe analysts who maintain positive ratings on Nvidia but give it lower price targets than the stock’s current price as bearish or bearish. They want to have it both ways.

Stay with their stories

Now let’s move on to what analysts are saying about Nvidia after the T2 update. LSEG reported that 18 analysts issued reports on Nvidia on August 29 (the day after the quarterly earnings release). Guess how many changed their recommendation? pat yourself on the back if you answered zero.

However, several analysts adjusted their 12-month price targets. The average price target is now about 5% below Nvidia’s share price. Wall Street is still full of bears/bear bulls.

Analysts seem to stick with their stories. Most still like Nvidia. Only one of those 18 updates was less than positive – and it was a “neutral” rating. But they still think the stock could fall.

The story continues

The big question is: Why? Maybe it’s because some analysts (perhaps many of them) don’t think Nvidia customers will see positive return on investment (ROI) with their purchases of the company’s GPUs. For example, Goldman Sachs analyst Toshiya Hari asked on the Q2 earnings call about customer ROI, noting that “there’s quite a heated debate in the market” about the topic. TD CowenMatt Ramsay also raised a question about customer ROI.

Why Wall Street Could Be Wrong About Nvidia

I think Wall Street may be wrong about Nvidia stock’s performance over the next 12 months. I also think that those who don’t expect Nvidia customers to see a strong ROI could be wrong.

Nvidia CEO Jensen Huang dismissed skepticism about customer ROI. He argued in the Q2 earnings call: “People who invest in Nvidia’s infrastructure get immediate returns.”

Huang rightly noted that a major data center migration from CPUs to GPUs is underway. He highlighted the tremendous potential of Nvidia’s new Blackwell architecture, which will begin shipping in Q4 2025. He highlighted the promise of generative AI in robotics, software development, large-scale recommender systems, and more.

All of this translates into significant growth prospects for Nvidia, not just over the next 12 months, but over the next 10 years and beyond. We may see Wall Street’s price targets align more closely with their recommendations for the stock over the next few months as Nvidia begins to report its Blackwell earnings.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and Nvidia. The Motley Fool has a disclosure policy.

Wall Street had expected Nvidia’s stock to fall ahead of the company’s Q2 update. Here’s what analysts think now. was originally published by The Motley Fool