Wall Street is optimistic! NVIDIA's earnings report is approaching, and nine analysts have raised their target prices this week

On August 27, before NVIDIA released its financial report, Wall Street institutions unanimously raised their price expectations, reflecting optimism for the AI chip leader.

In less than four days this week, at least nine different analysts from various institutions have increased their 12-month target price for the AI chip giant, pushing the average target price up by 3% to nearly $194, a historical high. This round of target price increases reflects analysts' growing confidence in NVIDIA's continued growth potential.

Based on NVIDIA's closing price on Wednesday, the new average target price implies an upside potential of over 10%. Major investment banks, including Morgan Stanley, UBS, Wedbush, and KeyBanc, participated in this round of increases.

NVIDIA's target price increase coincides with a general pullback in blue-chip tech stocks in the U.S. The stock prices of tech giants, including NVIDIA, have fallen from historical highs, dragging down the major stock index, the S&P 500. Investors began to take profits after tech stock valuations soared, shifting towards lower-risk sectors. The weakening expectation of a rate cut by the Federal Reserve in September has also intensified the sell-off in tech stocks.

As of Thursday this week, NVIDIA's stock price has fallen for three consecutive days, but since the last financial report was released at the end of May, the stock price has still risen by about 30%. As the largest weighted stock in the S&P 500 index, NVIDIA's core position in AI trading carries extremely high expectations from Wall Street.

Nine Institutions Raise Target Prices by Up to 60%, Highest Target Price Expected to Rebound by Nearly 37%

According to calculations by Wall Street Watch, among the nine institutions that have raised NVIDIA's target price this week, Cantor Fitzgerald has the highest new target price at $240. This implies that the institution expects NVIDIA's stock price to have a rebound potential of 36.8% after hitting a new low since August 1 on Wednesday.

HSBC's target price is the lowest among them but still reaches $200, which corresponds to an expected increase of 14% based on Wednesday's closing price, and HSBC's increase is the largest, with its target price raised by 60%. The specific adjustments are as follows:

• Cantor Fitzgerald raised its target price from $200 to $240, an increase of 20%;
• TD Cowen's target price ranks second, rising from $175 to $235, an increase of 34.3%;
• Wolfe raised its target price from $170 to $220, an increase of 29.4%;
• KeyBanc raised its target price from $190 to $215, an increase of 13.2%;
• Wedbush raised its target price from $175 to $210, an increase of 20%;
• Susquehanna raised its target price from $180 to $210, an increase of 16.7%;
• Morgan Stanley raised its target price from $200 to $206, an increase of 2.9%;
• UBS raised its target price from $175 to $205, an increase of 17.1%;
• HSBC raised its target price from $125 to $200, an increase of 60%.

Analysts Optimistic About Growth Certainty

Brian Mulberry, portfolio manager at Zacks Investment Management, stated:

"There is a general consensus that NVIDIA's growth momentum is very strong. Analysts are raising their expectations because they have to; the stock's upward trend will not slow down."

The analysts from Cantor Fitzgerald, which made the largest upward adjustment to the target price this week, released a research report on Monday, the 18th. The report pointed out that the Chinese market has been de-risked in Wall Street models, "the goal here is to build China on NVIDIA's platform, and any progress will be welcomed."

According to Bloomberg compiled data, nearly 90% of analysts covering NVIDIA have given it a buy rating. Analysts expect NVIDIA to announce double-digit quarterly revenue growth again next week.

Strong AI Demand, Tech Giants Increase Capital Expenditure

Before NVIDIA's earnings report, the recent U.S. earnings season has already released positive signals that NVIDIA is likely to deliver impressive performance. Tech giants such as Meta, Microsoft, Alphabet, and Amazon, which have reported their quarterly earnings for the period ending in June, have all committed to billions of dollars in increased capital expenditures, with about 40% of NVIDIA's revenue coming from these four companies.

These massive tech companies have stated that even with continued investments in data centers, they still struggle to fully meet computing power demands. The demand structure is also expanding, with secondary cloud vendors and sovereign clients becoming new growth drivers.

In addition to raising the target price, Morgan Stanley recently increased NVIDIA's second-quarter revenue forecast from $45.2 billion to $46.6 billion, exceeding Wall Street consensus expectations. The firm believes that demand has continued to rise during the quarter, and the alleviation of Blackwell chip supply bottlenecks supports revenue growth.

Deutsche Bank's latest research report pointed out that Blackwell chips could achieve $24 billion in revenue in the first quarter, nearly doubling from $11 billion in the fourth quarter of last year. This growth momentum successfully compensates for revenue losses caused by issues related to the Chinese market—approximately $8 billion in revenue loss was indicated in the second-quarter performance guidance.

Chinese Market Becomes a Key Variable, License Approval May Bring Incremental Gains

The possibility of the Chinese market resuming shipments has become a focal point for the market. According to CCTV News, the U.S. has approved NVIDIA to sell H20 chips to China. Analysts believe that any updates on Chinese business could bring upward potential.

Deutsche Bank noted that if permission to resume shipments to China is granted, NVIDIA's revenue for the third fiscal quarter is expected to increase, even if the company has to pay a 15% "license fee" to the U.S. government, the company's earnings per share could still rise by 10%.

However, extremely high expectations also mean that any performance falling short of expectations could trigger a sell-off in the entire market. Mulberry stated, "If there is some disappointment, it could have a very large impact. But the likelihood of them disappointing is very low." "