Nvidia's Q2 Earnings: Goldman Sachs Expects a "Clean Beat-and-Raise Quarter"

Goldman Sachs analyst James Schneider expects a "clean beat-and-raise quarter" from Nvidia, with guidance potentially topping expectations. Schneider has boosted his Datacenter segment revenue forecasts and sees a potential resumption of China sales adding ~$20 billion in revenue and $0.40 in EPS by FY27. Schneider maintains a Buy rating and raises his price target from $185 to $200, anticipating a potential 9.5% upside from current levels.

Nvidia Corporation (NASDAQ: NVDA) has seen its stock price surge by 94% since April, driven by several positive developments. The lifting of export restrictions to China, substantial hyperscaler capital expenditure (capex) spending, and strategic deals in the Middle East and Europe have all contributed to the company's strong performance [1].

The stock's recent rise comes on the heels of the company reporting mixed first-quarter earnings. However, the stock soared following President Trump's announcement of a new U.S.-China trade agreement that paused tariffs. This pause led to a significant recovery in the stock price, erasing the steep drop it suffered earlier in the year due to export restrictions on its H20 AI chip to China [2].

Nvidia's pivot to U.S. AI infrastructure investments and new chip designs for China has shown resilience. The company has invested heavily in its supply chains, with $3.2 billion in capex in fiscal 2025, expanding Blackwell accelerator production and AI infrastructure. The company's capex has spiked over 200% this year to more than $3 billion to meet hyperscaler demand [2].

The company's automotive segment has also seen significant growth, with a 103% year-over-year increase in revenue in the first quarter, driven by partnerships with Toyota and Aurora Innovation for autonomous vehicles [2]. This diversification helps mitigate the risks posed by tariff uncertainties.

Investors are optimistic about Nvidia's upcoming earnings report, scheduled for August 27. The company is expected to report 47% year-over-year (YoY) growth in earnings per share (EPS) and a 52.3% increase in revenue for the upcoming quarter. Wall Street maintains a Strong Buy consensus on the stock, with analysts projecting robust growth [3].

Goldman Sachs analyst James Schneider expects a "clean beat-and-raise quarter" from Nvidia, with guidance potentially topping expectations. Schneider has boosted his Datacenter segment revenue forecasts and sees a potential resumption of China sales adding ~$20 billion in revenue and $0.40 in EPS by FY27. Schneider maintains a Buy rating and raises his price target from $185 to $200, anticipating a potential 9.5% upside from current levels [4].

However, Nvidia still faces significant hurdles. The company's profitability remains robust, with the company reportedly raising prices on its GPUs by 10% to 15% due to tariffs. The AI market is projected to grow at a 37% compound annual growth rate (CAGR) through 2030, supporting Nvidia's $170 billion fiscal 2026 revenue forecast [2].

In conclusion, Nvidia's stock has surged due to several positive developments, including the lifting of export restrictions to China, substantial capex spending, and strategic deals. Investors are optimistic about the company's upcoming earnings report, with Wall Street maintaining a Strong Buy consensus. However, the company still faces significant hurdles and risks.

References:
[1] https://www.ainvest.com/news/nvidia-stock-rises-94-china-export-boost-hyperscaler-capex-spending-2508/
[2] https://www.ainvest.com/news/nvidia-stock-rises-94-china-export-boost-hyperscaler-capex-spending-2508/
[3] https://finance.yahoo.com/news/prediction-nvidia-stock-skyrocket-aug-090000871.html
[4] https://www.tikr.com/blog/reddit-nyse-rddt-stock-soars-over-17-on-q2-earnings-and-guidance-beat