Market Analysis

Before earnings, an analyst resets the price target for Nvidia stock

Amos Simanungkalit · 22 Aug26.6K Views

Investors in Nvidia (NVDA) experienced significant volatility leading up to its Q2 earnings report in August. The stock fell below $100 on August 5, but then saw a recovery, rising for six consecutive days from August 12 to August 19. As of August 21, Nvidia's share price was around $128.

The early-month decline in Nvidia's stock was attributed to global market instability following the yen-carry trade and concerns over a possible chip delivery delay due to a design flaw in the Blackwell architecture.

Despite these challenges, Nvidia remains a leader in the AI sector, holding an 80% share in AI processors. However, competitors like AMD are gaining ground. On August 19, AMD announced a $5 billion acquisition of ZT Systems to enhance its GPU sales, causing Nvidia’s stock to drop 2% the following trading day. GPUs are critical for executing the matrix calculations necessary for AI processing.

Nvidia is set to release its fiscal Q2 earnings on August 28, and these results will be crucial for evaluating the health of the AI and semiconductor industries. Earnings reports from other chip manufacturers could offer insights into Nvidia's performance and future stock trends.

AMD, the second-largest player in the market, reported strong Q2 earnings on July 30, surpassing analyst expectations for both revenue and profits. Its revenue rose by 9% to $5.84 billion, and earnings increased by 19% to 69 cents per share. AMD also anticipates strong AI demand moving forward.

In contrast, Intel reported disappointing results on August 1, with a net loss of $1.61 billion, down from a net income of $1.48 billion the previous year. Both revenue and earnings fell short of forecasts, which Intel attributed to an accelerated production of Core Ultra PC chips designed for AI workloads, according to CEO Pat Gelsinger.

Nvidia had reported record quarterly revenue of $26.0 billion for fiscal Q1 2025, marking an 18% increase from Q4 and a 262% rise from the previous year. For Q2 FY25, Nvidia projects revenue of $28 billion, with GAAP and non-GAAP gross margins estimated at 74.8% and 75.5%, respectively. This compares to Q2 FY24, where revenue was $13.51 billion, and the gross margins were 70.1% and 71.2%.

CEO Jensen Huang highlighted in Q1’s earnings release that Nvidia is leading the shift towards accelerated computing and AI data centers, stating, “The next industrial revolution has begun… We are poised for our next wave of growth.”

On August 21, HSBC analyst Frank Lee increased Nvidia’s price target from $135 to $145 and maintained a buy rating. Lee expects Nvidia to benefit from continued strong demand for AI GPUs, with minimal impact from any potential delays in the product roadmap. HSBC forecasts Nvidia’s Q2 sales will reach $30 billion, surpassing the company’s guidance and consensus estimates of $28 billion and $28.6 billion, respectively.