Goldman Sachs comments on NVIDIA's earnings report: Performance is solid, but market expectations are high, and stock price faces pressure

Despite NVIDIA's solid performance, it failed to deliver another significant "surprise" that exceeded expectations, which may not be enough for a tech giant that has high hopes placed on it.

Wallstreetcn previously mentioned that NVIDIA's revenue for the second quarter was $46.7 billion, with a year-on-year growth rate at its lowest in over two years, still exceeding analyst expectations. The earnings guidance for the third quarter estimates a median revenue of $54 billion, which is generally in line with market expectations but is considered "tepid" and lacking in highlights.

After the earnings report was released, NVIDIA's stock fell over 3% in after-hours trading.

According to news from the Chasing Wind Trading Desk, Goldman Sachs stated in its latest report that although NVIDIA's recently announced quarterly performance and next quarter's guidance are solid and generally meet Wall Street expectations, they may still struggle to satisfy the previously high market expectations, potentially leading to downward pressure on its stock price in the short term. Goldman Sachs analysts believe that the market has largely priced in the growth potential brought by its new generation of Blackwell architecture chips.

Goldman Sachs identifies four key areas that will determine NVIDIA's future direction, including customer demand and supply chain, forward revenue and new products, the status of its business in China, and gross margin trends.

Focus on Subsequent Developments and Chinese Business

Goldman Sachs analysts indicated that investors' focus on NVIDIA's future direction centers on several key issues.

First is the latest commentary on customer demand and any potential supply chain constraints: Can the demand for AI chips continue? Are there still bottlenecks in the supply chain?

Second is the company's visibility forecast for revenue in 2026 and details regarding the release of the next-generation Rubin product line.

Additionally, more details about NVIDIA's business in China will also be a focal point for the market, especially after management confirmed that no H20 chips were shipped to China this quarter.

Finally, investors will closely monitor the company's future gross margin trends to assess its pricing power and profit outlook amid fierce competition.

Goldman Sachs Maintains "Buy" Rating, Focuses on Four Major Risks

Despite potential short-term pressure on the stock price, Goldman Sachs maintains a "Buy" rating on NVIDIA and has set a 12-month target price of $200. This target price is based on an estimated normalized EPS of $5.75 and a P/E ratio of 35 times.

However, the report also clearly outlines four key downside risks that investors need to be wary of:

AI infrastructure spending slowdown: This is the biggest potential risk; any cooling of enthusiasm for AI investments will directly impact NVIDIA's growth.

Increased competition leading to market share loss: Pressure from competitors like AMD may erode NVIDIA's market share

Competition leads to profit margin erosion: Intense market competition may force companies to lower prices, thereby harming their high profit margins.

Supply chain constraints: If production and delivery capabilities cannot keep up with demand, it will directly limit revenue growth