NVIDIA: Analysts Bullish Ahead of Earnings - Is It a Buy Now?

Key Points

• NVIDIA has received a series of analyst upgrades ahead of its upcoming earnings report, reflecting strong market confidence in its performance and potential.
• Evercore ISI raised its price target for NVIDIA from $145 to $150, maintaining an Outperform rating.
• Evercore ISI expects NVIDIA to dominate parallel processing, potentially capturing 70-80% of the market.

As NVIDIA NASDAQ: NVDA prepares to report its fiscal second-quarter earnings on Wednesday, August 28, after the market close, a surge of analyst upgrades has captured investor attention. With the company already thriving in the technology and artificial intelligence sectors, the critical question is whether now is the right time to buy.

Analyst Upgrades Leading Up to Earnings

In the week leading up to NVIDIA's earnings report, the stock received a wave of positive analyst actions. On Monday, The Goldman Sachs Group reaffirmed its Buy rating, underscoring its optimistic outlook on the stock ahead of the crucial earnings event. Two days later, HSBC raised its price target from $135 to $145, indicating over 13% potential upside for the tech leader.

The bullish sentiment continued on Thursday when Rosenblatt Securities reiterated its street-high price target of $200. The following day, Wedbush and Evercore ISI also raised their targets, with Wedbush boosting its price target from $120 to $138 and Evercore increasing its target from $145 to $150, forecasting over 20% upside.

These analyst upgrades reflect strong market confidence in NVIDIA's ability to maintain its leadership in the AI space. The widespread analyst support highlights the high expectations for NVIDIA as it heads into its earnings report.

Analyst Estimates: What to Expect from Q2

For its fiscal second quarter, ending July 30, NVIDIA has guided for revenue of $28 billion, representing a 107% year-over-year increase. However, Wall Street is even more optimistic, with consensus estimates now rising to $28.6 billion.

NVIDIA's track record of surpassing expectations suggests that even these estimates could be conservative. The company has consistently outperformed investor expectations for both sales and profits over the past four quarters. For example, in the first quarter, NVIDIA reported revenue of $26.06 billion, easily beating the estimated $24.59 billion. If NVIDIA continues its trend of exceeding its revenue guidance by 8-10%, which it has done in the last four quarters, revenue could exceed $30 billion.

Evercore ISI's Bullish Outlook

Adding to the positive sentiment, Evercore ISI recently raised its price target on NVIDIA from $145 to $150, maintaining an Outperform rating. Evercore ISI considers NVIDIA its top pick in the "Tectonic Shift in Computing" space, driven by its robust ecosystem and potential to dominate parallel processing with an estimated 70-80% market share.

Evercore ISI is also bullish on NVIDIA's long-term prospects, forecasting that the company could achieve over $10 in earnings per share (EPS) by 2030. They also suggest that NVIDIA could grow to represent a significant portion of the S&P 500 Index, possibly accounting for 10-15% of the index.

In light of NVIDIA's strong positioning, Evercore ISI has revised its third-quarter and full-year 2024 estimates upwards, reflecting the anticipated value creation in NVIDIA's market segment. However, the firm also cautions that capital expenditure forecasts for hyperscale computing are variable and could change, posing potential risks.

Conclusion: Is NVIDIA a Buy Now?

With several analysts boosting their price targets and expressing confidence in NVIDIA's long-term outlook, the stock appears ready for further gains. The upcoming earnings report could be a critical moment for the company, particularly if it continues its trend of outperforming expectations. From a technical standpoint, NVIDIA seems primed for additional upside. Currently, just 8% shy of its all-time highs, the stock is consolidating above all key moving averages, boasting a 161% gain year-to-date and having successfully rebounded from its late July and early August correction.