TD Cowen analyst Joshua Buchalter reiterated his Buy rating on Nvidia (NVDA) after the semiconductor giant surpassed analysts’ expectations on both sales and earnings in the second quarter. Although Nvidia reported less upside than its recent standards, Buchalter has zero concerns considering robust demand for the company’s products. He also maintained his $235 price target on NVDA, calling it his “Top Pick.” The price target implies 29.4% upside potential from current levels.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Buchalter is a top analyst on TipRanks, ranking #1,798 out of 10,004 analysts tracked. He boasts a 57% success rate and an average return per rating of 8.20%.
Why Buchalter Remains Confident in Nvidia
Buchalter is highly encouraged by the ongoing growth in demand for Nvidia’s artificial intelligence (AI) chips. He is particularly impressed by the company’s transition from Blackwell to Blackwell Ultra GPUs (Graphics Processing Units) and highlights Nvidia’s gross margins moving toward 75%. Additionally, he noted that the Rubin GPU roadmap remains on track. However, NVDA stock fell over 3% in after-hours trading as the company’s guidance failed to meet elevated expectations.
Commenting on the results, Buchalter pointed out that Nvidia’s mild beat was driven by strength in the Gaming segment and a strong performance in Networking, which saw a 46% sequential increase due to higher rack-scale system sales.
He also stated that Compute revenue declined sequentially, mainly due to the absence of a typical $4 billion in revenue from H20 chip exports to China. Buchalter noted that excluding H20, Compute would have grown 12% sequentially and is expected to accelerate into the October quarter.
Although Nvidia estimates H20 sales to China could generate an additional $2 to $5 billion in Q3, Buchalter has excluded any China-related revenue from his own Q3 forecast. He believes that China sales for Nvidia and AMD (AMD) are “at the behest of both the U.S. and Chinese governments,” and given limited visibility on those decisions, he prefers to leave them out of his model. He believes that while investors have many questions regarding Nvidia’s business in China, the company’s management has offered limited clarity, prompting him to take a cautious approach.
Is NVDA Stock a Buy, Hold, or Sell?
On TipRanks, NVDA stock has a Strong Buy consensus rating based on 36 Buys, three Holds, and one Sell rating. The average Nvidia price target of $199.94 implies 10.1% upside potential from current levels. Year-to-date, NVDA stock has surged 35.3%.
Please note that these ratings were issued before the Q2 results and may change once analysts revisit them.
