Here’s what Wall Street is saying about Nvidia ahead of earnings

Nvidia (NVDA) is scheduled to report results of its second fiscal quarter after the market close on Wednesday, August 27, with a conference call scheduled for 5:00 pm ET. What to watch for:

EXPECTATIONS: During its last earnings conference call, Nvidia said its outlook for Q2 includes revenue expected to be $45.0B, plus or minus 2%. “This outlook reflects a loss in H20 revenue of approximately $8.0B due to the recent export control limitations; GAAP and non-GAAP gross margins are expected to be 71.8% and 72.0%, respectively, plus or minus 50 basis points,” it stated. “The company is continuing to work toward achieving gross margins in the mid-70% range late this year,” it added.

Current consensus EPS and revenue forecasts for Nvidia’s July-end quarter stand at $1.01 and $46.14B, respectively, according to data from S&P Global Market Intelligence.

STREET SEES BEAT AND RAISE: Stifel raised the firm’s price target on Nvidia to $212 from $202 and kept a Buy rating on the shares ahead of the fiscal Q2 report on August 27. The firm expects Nvidia to report a beat with a guidance raise as H20 shipments resumed in July, coupled with accelerating demand for its GB300 infrastructure. Stifel’s supply chain checks continue to point to expectations for ramping GB300 orders into year-end even as sustained GB200 demand continues, Stifel tells investors in a research note. The firm continues to view Nvidia shares as attractively valued.

Meanwhile, Evercore ISI analyst Mark Lipacis also raised the firm’s price target on Outperform-rated Nvidia to $214 from $190. In front of the July-end quarter earnings call scheduled for August 27 the firm raised its estimates and would be buyers, adding that Nvidia remains the analyst’s top pick, in the near-term due to improving visibility as well as over the longer term.

Last week, UBS raised the firm’s price target on Nvidia to $205 from $175, while keeping a Buy rating on the shares. UBS sees Q2 revenue in the $46B range, with Q3 revenue guided to about $54B-$55B excluding China, or up to $57B if China is included, the firm tells investors in a research note. UBS’ supply chain work on production suggests compute can grow 20%-25% quarter over quarter on a base of $35B in Q2, which should add $7B-8B of compute revenue on a quarter-over-quarter basis for Q3, the firm says.

Wedbush also upped the firm’s price target on Nvidia to $210 from $175, keeping an Outperform rating on the shares ahead of the fiscal Q2 report on August 27. The firm says hyperscale spending results for Q2 “were ubiquitously positive.” Conversations throughout the quarter indicated “robust” demand for Nvidia with supply at times seemingly falling shy of demand, the firm tells investors in a research note. Wedbush’s checks suggest Nvidia’s GB300 server shipments appear on track for late Q3 or Q4. The increased both its earnings expectations and the stock’s multiple to reflect solid demand trends and some rebound in China sales.

ONGOING SHIPMENT MOMENTUM: Baird raised the firm’s price target on Nvidia to $225 from $195 and keeps an Outperform rating on the shares ahead of Wednesday’s earnings report. The firm increased revenue and earnings estimates citing “significant acceleration” in GB200 sell-through shipments in July. It expects ongoing shipment momentum for Nvidia with xAI shipments weighted to fiscal Q4. GB300 is on track for an initial late September launch, and represents a significant performance step-up versus GB200, Baird tells investors in a research note.

PRODUCTION HALT: On Friday, The Information’s Qianer Liu reported that Nvidia asked some of its component suppliers, including Samsung (SSNLF) and Amkor (AMKR), to stop production related to its H20 AI chip after Chinese officials urged local firms to avoid using it. The order comes weeks after the Chinese government told companies to stop buying the chips due to alleged security concerns, the report noted.

DISCUSSIONS WITH CHINA: Nvidia CEO Jensen Huang is having discussions with China to quell their concerns about potential security risks associated with the company’s AI chips, Lily Kuo of The New York Times reports. The company was recently granted permission by the U.S. to sell its H20 semiconductors in China, but China’s internet regulator, Cyberspace Administration of China, said U.S. AI experts told them of “backdoor” functions that would track chips or shut them down remotely. “There are no such things,” Huang said, according to the Times. “There never has been. And so hopefully, the response that we’ve given to the Chinese government will be sufficient. We are in discussions with them.”

SENTIMENT: Click here to check out the recent Media Buzz Sentiment on Nvidia as measured by TipRanks.