Nvidia's Q2 Earnings Anticipated to Boost Stock, Goldman Sachs Raises Target Price by 8%

Nvidia Corporation (NVDA.US) is on the cusp of a significant financial milestone as it prepares to unveil its second-quarter earnings. In anticipation of this, Goldman Sachs has elevated its target price for Nvidia from $185 to $200, while retaining a "buy" rating. Analyst James Schneider, in a recent report, expressed confidence that Nvidia will deliver better-than-expected results and raise its guidance, despite high market expectations.

Schneider emphasized that investors should focus on the company's earnings guidance, particularly the progress of its China business and changes in profit margins, as these factors could significantly impact stock performance. He highlighted three key areas of focus for the upcoming earnings call. The first is the production timeline for the Blackwell chip in the second half of the year and the development progress of the next-generation Rubin chip architecture, slated for release in 2026.

The second area of focus is the timeline for the H20 chip, designed for the China market and compliant with U.S. export regulations. The launch schedule and expected revenue contribution of these lower-spec AI chips will be crucial in assessing Nvidia's resilience in the China market. The third key point is the trend in gross margins, particularly whether the company can release profit margins by absorbing H20 chip inventory. Given that Nvidia's stock has risen approximately 34% this year, strong earnings support will be essential to sustain the current valuation.

Market expectations for this earnings report are high. Analysts generally anticipate that Nvidia will achieve $4.57 billion in revenue and $1 in earnings per share. Schneider's report underscores the importance of these earnings in maintaining investor confidence and driving future stock performance. The upcoming earnings call will provide critical insights into Nvidia's strategic direction and financial health, making it a pivotal moment for investors and industry observers alike.