The highly anticipated NVIDIA earnings report, will the third-quarter guidance be below expectations?

NVIDIA will announce its latest financial report next Wednesday, and the guidance for the third quarter will become the focus of market attention.

A recent report from KeyBanc Capital Markets indicates that NVIDIA may temporarily exclude direct revenue from the Chinese market in its guidance for the next fiscal quarter, as the specific timing for semiconductor export license approvals under U.S. export restrictions remains uncertain.

KeyBanc analysts stated that if the Chinese business based on chips like H20 and RTX6000D (B40) is included, it could have brought NVIDIA an incremental revenue of $2 billion to $3 billion.

Currently, the market generally expects NVIDIA's third-quarter revenue to be $45.92 billion, with earnings per share of $1.01.

Capacity Improvement Supports Fundamentals

Despite facing short-term uncertainties in the Chinese market, NVIDIA's business fundamentals remain strong, providing robust support for its long-term growth.

KeyBanc emphasized in the report that NVIDIA's GPU supply and capacity are significantly improving, which is the core driver of its continued strong performance.

Data shows that in the fiscal quarter ending in July, NVIDIA's GPU supply increased by 40%, and it is expected to grow another 20% by the fiscal quarter ending in October with the ramp-up of B200; meanwhile, the newer and more powerful B300 chips are set to start shipping in the October quarter and are expected to account for half of the Blackwell series shipments.

Additionally, the production efficiency of server racks is also improving.

The report noted that the manufacturing yield of the GB200 racks by server ODM manufacturers has approached 85%, and the rack shipment volume is expected to reach 15,000 to 17,000 units by the end of the year. Therefore, the firm has raised its forecast for the annual GB200 rack shipment volume from 25,000 units to 30,000 units.

Wall Street Maintains Optimistic Expectations

KeyBanc analyst John Vinh, while issuing a warning, raised NVIDIA's target price from $190 to $215 and maintained an "overweight" rating.

Susquehanna analyst Christopher Rolland also sees continued momentum in NVIDIA's data center business, raising its target price from $180 to $210 and maintaining a "positive" rating.

Despite two Wall Street firms raising their target prices, the market reaction remains relatively cautious. On Wednesday morning, NVIDIA's stock price was still down about 2.5%