As the U.S. semiconductor company Nvidia, a major beneficiary of the artificial intelligence (AI) rally, prepares to announce its second-quarter earnings, Wall Street remains optimistic. Amid a series of upward target price revisions, there are also expectations that Nvidia's earnings could act as a positive catalyst for the recently sluggish New York stock market overall.
According to economic media outlets such as CNBC on the 20th (local time), most Wall Street analysts currently expect Nvidia's second-quarter earnings, to be announced after the market closes on the 23rd, to exceed market expectations and foresee further gains in Nvidia's stock price.
According to FactSet, out of 50 Wall Street analysts, 43 currently have a 'buy' rating on Nvidia. At the beginning of the year, only 28 analysts held a buy rating. The average target price they set is $529.60, a sharp increase compared to about $146 at the start of the year. This is also 22% higher than the closing price of $432.99 on the 18th.
Nvidia, which supplies over 90% of the global market with high-value-added semiconductors such as graphics processing units (GPUs) used in AI development, has continued its rally, buoyed by a surprise strong first-quarter performance and rosy expectations. CNBC reported, "Wall Street does not lower its expectations for Nvidia." Barclays evaluated that "Nvidia is virtually monopolizing the AI boom with no clear competitors."
Ahead of the second-quarter earnings announcement, Wall Street analysts continue to raise their target prices. Hans Mosesmann, an analyst at investment bank Rosenblatt, raised Nvidia's target price last week from $600 to $800 per share. This implies an additional upside potential of 84% over the next year. Mosesmann expects Nvidia's second-quarter earnings to surpass market consensus.
Rick Schafer, an analyst at Oppenheimer, also raised the target price from $420 to $500 per share. He stated, "Nvidia has transformed from a graphics company into the leading AI computing platform company," and added, "We see several structural tailwinds driving sustained growth in high-performance gaming, data centers, AI, and autonomous vehicles." UBS also raised its target price from $475 to $540 per share in a report, noting, "Although some investors have started to worry about high valuations due to recent volatility in Nvidia's stock price, it is not yet time to take profits."
They commonly cited the growth of the data center segment, one of Nvidia's largest revenue sources, and the acceleration of orders for Nvidia's GPUs by Chinese companies due to tightened U.S. export controls as reasons for their optimistic outlook.
Earlier, Nvidia sparked the New York stock market rally by announcing surprise strong first-quarter earnings and guidance at the end of May. MarketWatch assessed that the upcoming second-quarter earnings announcement will test Nvidia's position as a leading beneficiary of the AI rally and whether it can meet the high market expectations. The Wall Street Journal (WSJ) also noted, "Nvidia's earnings outlook, which exceeded expectations, surprised Wall Street," adding, "Now it faces its first test with the second-quarter earnings announcement." The publication added that in the past five years, Nvidia has missed Wall Street sales forecasts only twice.
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