Wall Street comments on NVIDIA's earnings report: Ignore the "noise" from the Chinese market, the fundamentals remain strong, optimistic about the huge growth potential of Blackwell and Rubin

NVIDIA's second-quarter earnings report once again validates its core position in the AI wave. Despite uncertainties in the Chinese market, the company's fundamentals remain strong. Several Wall Street investment banks have unanimously raised their target prices, believing that investors should ignore the "noise" from the Chinese market and focus on the significant growth opportunities brought by Blackwell and the next-generation Rubin products.

According to news from the Chasing Wind Trading Desk, NVIDIA's second-quarter revenue reached $46.7 billion, exceeding market expectations, with third-quarter guidance of $54 billion also surpassing forecasts. More importantly, this growth completely excludes contributions from the Chinese market, highlighting the strong demand for the company in other global markets. Bank of America Securities, Morgan Stanley, Citibank, and Goldman Sachs all maintain a buy rating, with target prices ranging from $200 to $235.

All investment banks agree that NVIDIA holds a solid position in the best investment opportunities for AI infrastructure construction, with clear long-term growth prospects. Investors should focus on the company's core growth logic rather than short-term uncertainties.

All firms are optimistic about the strong performance of NVIDIA's Blackwell product line. Bank of America stated that the Blackwell product line has reached full production, producing about 1,000 racks per week, with an annual revenue capacity of approximately $39 billion. As system-level racks gradually mature and achieve scale, gross margins are expected to rebound more quickly to the previous mid-70% level.

Goldman Sachs noted that the annualized revenue of the network business Spectrum-X product line has reached $10 billion, significantly up from the previous $8 billion. The next-generation Rubin products are scheduled to launch in mid-2026, providing strong momentum for future growth.

Additionally, analysts generally believe that NVIDIA maintains over 80% market share in the rapidly growing global AI infrastructure construction, with an industry-leading free cash flow profit margin of over 45%, while its valuation is only about 1 times the earnings growth rate, far below the 2 times level of its tech peers.

Financial Performance Exceeds Expectations, Guidance is Positively Optimistic

The report states that NVIDIA's second-quarter revenue was $46.7 billion, a 6% increase quarter-over-quarter and a 56% increase year-over-year, exceeding the market consensus expectation of $46.2 billion. Data center business revenue was $41.1 billion, a 5% increase quarter-over-quarter and a 56% increase year-over-year. The gaming business performed strongly, with revenue of $4.3 billion, a 14% increase quarter-over-quarter and a 49% increase year-over-year, surpassing the market expectation of $3.9 billion by 11%.

Earnings per share were $1.05, a 30% increase quarter-over-quarter and a 54% increase year-over-year, exceeding the market expectation of $1.01 by 4%. The gross margin of 72.7% exceeded expectations, but after excluding the 40 basis points contribution from H20 inventory sales, the adjusted gross margin of 72.3% was in line with expectations.

Third-quarter revenue guidance is $54 billion, a 16% increase quarter-over-quarter and a 54% increase year-over-year, exceeding the market expectation of $53.5 billion. The gross margin guidance is 73.5%, above Bank of America's expectation of 73.0%. This is the first time a company has guided for a single-quarter revenue growth of $7 billion, and this growth completely excludes contributions from the Chinese market.

Blackwell Product Line Fully Accelerates, Production Scale Rapidly Increases

All investment banks are optimistic about the strong performance of NVIDIA's Blackwell product line. Bank of America pointed out that the Blackwell Ultra platform has achieved full production, producing about 1,000 racks per week. At a price of $3 million per rack, this could generate approximately $39 billion in sales over 13 weeks. As the system-level racks gradually mature and scale up, gross margins are expected to recover more quickly to the previous mid-70% level.

Morgan Stanley analysts stated that Blackwell's revenue grew by 17% quarter-over-quarter in the second quarter, and management is optimistic about the production progress of Blackwell Ultra, with exceptionally strong demand. Citigroup estimates that approximately $2.8 billion in Blackwell sales translates to about 900,000 devices, an increase from the previous quarter's estimate of 700,000 units.

Goldman Sachs maintains a buy rating, noting that Blackwell will account for a significant portion of GPU shipments in 2025 and 2026. The firm expects Blackwell's share to increase from about 61% in 2025 to 87% in 2026, while the next-generation Rubin products are expected to begin mass production in mid-2026.

Related network products continue to benefit, with the network business achieving significant growth, up 46% quarter-over-quarter and 98% year-over-year, with revenue reaching $7.3 billion. The Spectrum-X product line has achieved an annualized revenue of $10 billion, a significant increase from $8 billion in April.

Next-generation Rubin products are progressing as planned, with growth expected in 2026

NVIDIA's pace of product innovation remains strong. Goldman Sachs pointed out that the next-generation Rubin products are scheduled to launch in mid-2026, maintaining a hardware advantage of 0.5-1 years over AMD GPU products. The Rubin platform is still on track for a mid-2026 launch, and all six chips that make up the platform have begun trial production.

Management is optimistic about the improvements of Rubin over Blackwell in workload performance, efficiency, and cost-effectiveness, providing strong support for growth in 2026. Goldman Sachs expects earnings per share in 2026 to exceed market expectations by about 10%.

Sovereign clients are expected to contribute over $20 billion in revenue in 2025, more than doubling year-over-year, indicating that the adoption of Blackwell is expanding from traditional hyperscale clients to include non-traditional client groups such as sovereign clients.

All investment banks agree that NVIDIA has a solid position as the best investment opportunity in AI infrastructure construction, with clear long-term growth prospects. Investors should focus on the company's core growth logic rather than short-term uncertainties.

Risks in the Chinese market are controllable, and long-term growth logic remains unchanged

NVIDIA's second-quarter performance largely met expectations, and top Wall Street investment banks have raised their target prices to $210-235, focusing on the company's dominant position in global AI infrastructure construction and long-term profitability. Investment bank analysts advise investors to overlook short-term disruptions in the Chinese market and focus on the company's enormous growth potential, with earnings per share expected to reach $10 by 2027 Despite the uncertainties in the Chinese market, analysts have completely excluded contributions from the Chinese market in their forecasts. China's share of data center revenue has dropped to single-digit percentages, and management confirmed that no H20 products were shipped to China in the second quarter, with third-quarter guidance also not including contributions from the Chinese business.

Once H20 products begin to ship, previously written-down inventory can be reused, which is expected to boost gross margins by 200-300 basis points. H20 products are expected to achieve revenue of $2-5 billion in the third quarter if uncertainty issues are alleviated. Even at the low-end estimate of $2-5 billion in H20 chip shipments mentioned by management, guidance could be raised to $56 billion.

It is expected that the anticipated sales growth of approximately $200 billion in non-China regions for the fiscal year 2026 will fully offset the uncertainty headwinds. Singapore accounts for 22%, but over 99% of the data center computing revenue actually comes from U.S. customers.

Valuation Advantage is Obvious, Target Prices Generally Raised

NVIDIA's price-to-earnings growth ratio is only 0.9 times, while the average for the other six tech giants is 3.9 times, despite NVIDIA having over 50% excellent free cash flow profit margin, far exceeding the sub-20% levels of other companies. At the current stock price of $181.60, the company's valuation is only 26.5 times the non-GAAP earnings per share for the fiscal year 2027.

• Bank of America raised its target price from $220 to $235, increasing earnings per share expectations for fiscal years 2026/27/28 by 6%/7%/11% to $4.45/$6.26/$8.03, respectively.
• Morgan Stanley raised its target price from $206 to $210, maintaining a 33 times price-to-earnings valuation method.
• Citibank raised its target price from $190 to $210, based on a 30 times price-to-earnings valuation for approximately $7 earnings per share in fiscal year 2026.
• Goldman Sachs maintains a buy rating with a target price of $200 unchanged.

NVIDIA expects AI infrastructure spending to reach $3-4 trillion by the end of this decade, up from the previous forecast of $2.3 trillion by 2029. Based on a total addressable market outlook of over 40% for AI accelerators, NVIDIA's market share in accelerators is about 60%, indicating further upside potential in accelerator sales