Turbulence or celebration? The market welcomes "NVIDIA time" early tomorrow morning!

The eagerly anticipated "NVIDIA Time" is about to make a big impact.

After the U.S. stock market closed on Wednesday, what is known as the "most important stock in the world" is set to release its financial results for the second quarter of the 2025 fiscal year, followed by an earnings conference call. NVIDIA's report card not only affects itself, but also the entire global technology and financial industry chain.

In the AI frenzy, NVIDIA, which is "outstanding" in the market, is highly anticipated. The market is optimistic that NVIDIA's revenue for this quarter will double year-on-year, and expects the company's stock price to reach new highs. However, doubts such as "AI is overhyped" and "NVIDIA's valuation is too high" have also been raised continuously.

Whether NVIDIA can live up to the market's optimism and renew the "AI faith" is crucial. Morgan Stanley stated that if NVIDIA's revenue exceeds expectations, it may drive up AI-related stocks by 3-15%, otherwise it could lead to a collapse in AI stocks. Bank of America believes that if NVIDIA's performance disappoints, there could be a 10% fluctuation, equivalent to around $300 billion.

In addition to performance, the production schedule of NVIDIA's next-generation AI chip Blackwell has also become a focus of attention.

Zerohedge reported that typically, NVIDIA's financial data is usually released around 4:20 pm Eastern Time (5:20 am Thursday Beijing Time), followed by an earnings conference call at 5:00 pm Eastern Time (6:00 am Thursday Beijing Time).

Can Revenue Double? Goldman Sachs, Morgan Stanley, J.P. Morgan Optimistic

NVIDIA has surged more than 170% so far this year, with a market value of just over $3 trillion, while the average component stock of the S&P 500 index is only $990 billion. However, according to Koyfin data, after hitting a peak of around $135 in June, the stock seems to have stalled.

Will the latest financial report push NVIDIA's stock price higher again? The market generally expects NVIDIA's Q2 revenue to double year-on-year, with revenue expected to increase by about 112% to $28.68 billion.

Goldman Sachs is bullish on NVIDIA and has provided a revenue forecast higher than market expectations. The institution expects the company's Q2 revenue to reach $29.769 billion, with earnings per share of $0.68, exceeding market expectations by 4.1% and 5.9%, respectively. Goldman Sachs believes that the Q2 financial report will show strong demand for NVIDIA's H100 GPU and the bulk shipment of H200 beginning. Goldman Sachs stated:

NVIDIA's profitability has room to grow, with an expected earnings per share (EPS) of $4.16 for the 2025 fiscal year; and the strong demand trend continues, with cloud service providers (CSPs) and enterprise demand remaining strong, which may support NVIDIA's performance

In the past few quarters, the performance rhythm has been that the revenue for each quarter is about $1.5 billion higher than expected (with reference to the revenue expectation of about $28.8 billion for the July quarter), and it is expected that the revenue for the next quarter will increase by about $2 billion compared to the previous quarter.

JP Morgan expects NVIDIA's Q2 revenue to reach $29.85 billion, also higher than the market consensus ($28.6 billion), with a guidance range of $27.44-28.56 billion:

Q2 Expectations

Revenue: $29.85 billion, guidance range $27.44-28.56 billion, market consensus $28.6 billion;

Data center revenue: $25.52 billion (compared to $22.6 billion in the previous quarter);

Gross margin 76.2% (guidance range 75%-76%);

Earnings per share EPS is $0.69, market consensus is $0.64.

Performance Guidance

Q3 revenue $32.95 billion, market consensus $31.41 billion.

Revenue for fiscal years 2025 and 2026 are $125.7 billion and $186.6 billion respectively, with market consensus at $120.3 billion and $166.18 billion.

Chart: Current market expectations for NVIDIA's performance

Morgan Stanley also expressed optimism about NVIDIA's performance in a report on August 25, stating, "We expect this to be a strong quarter, likely exceeding higher expectations."

Morgan Stanley pointed out that if NVIDIA's revenue exceeds expectations, AI-related stocks could see an upside potential of 3-15%. Conversely, if it falls short of expectations, the entire AI stock group could see a downside potential of 5-10%, and the priority of stock selection may reverse.

However, Morgan Stanley advised not to give up on AI-related stocks even if the third-quarter financial report is disappointing. It believes that although the valuation of AI stocks has been readjusted, it is far from reaching bubble levels, and some pullback in stock prices during the price discovery phase is normal.

Interestingly, the cryptocurrency market has quietly given a vote of confidence to NVIDIA. Analysis indicates that based on the recent performance of AI tokens, the cryptocurrency market seems to have given a vote of confidence to NVIDIA's financial report. AI crypto tokens have surged in the past week, significantly outperforming the overall cryptocurrency market.

NVIDIA may face a $300 billion fluctuation? BofA warns: Do not underestimate the risk

Bank of America analyst Gonzalo Asis warned in a recent report that the market "may underestimate the risk of disappointing NVIDIA performance," and the financial results may bring unexpected volatility to the marketCurrently, the options market has "booked" high volatility in NVIDIA's stock price after the financial report. The implied stock price volatility of NVIDIA options reaches 10% (approximately $300 billion based on a market value of around $3 trillion), and the stock has not dropped by more than 8% on the day of the financial report since 2018. A report from Bank of America mentioned:

The implied stock price volatility of NVIDIA options is 10%, which means the stock price could fluctuate by 10% in either direction, and the stock has not dropped by more than 8% on the day of the report since 2018.

The volatility index (VIX) on August 5th was 65, highlighting the return of fragility to the broader market, and the S&P 500 index often remains fragile after such a significant impact. Any adverse results from NVIDIA's financial report could further exacerbate market instability.

Concerns Arise Over Blackwell Next-Generation AI Chip Timeline

Morgan Stanley believes that NVIDIA's Q3 revenue guidance meeting market expectations may not have a significant impact on the stock. What truly affects the stock is whether the company can alleviate concerns among investors about potential delays in Blackwell due to chip design adjustments.

NVIDIA CEO Jensen Huang previously stated in May that the chip would be shipped in the second quarter of this year. Earlier this month, The Information reported that the company is facing production issues, which could delay a significant amount of shipments until the first quarter of 2025. Analysts point out that design obstacles could delay shipment times.

Morgan Stanley states that the possibility of such a delay cannot be ruled out. However, through investigations into the supply chain and observations of strong procurement demand and increased capital expenditures by cloud computing companies, Morgan Stanley concludes that the current state of the artificial intelligence chip market is very positive.

Some analysts suggest that NVIDIA can offset most of the impact of Blackwell chip delays by substituting orders with the previous generation Hopper chips. HSBC analyst Frank Lee wrote in a report in August: "We expect NVIDIA to reduce its focus on Blackwell B100/B200 GPUs in the second half of the year and instead increase its focus on Hopper H200."

JP Morgan believes that NVIDIA's GB200 production capacity expansion may slow down in the second half of 2024 but is expected to significantly expand in 2025. Despite facing initial production challenges, it is expected that the shipment volume of GPUs related to Blackwell will still reach around 4.5 million units or more in 2025.

What Else Is Worth Paying Attention To?

"This is currently the most important stock globally," said Eric Jackson, an analyst at EMJ Capital, to the media. "If they fail, it will bring significant problems to the entire market. I believe their stock price will experience an unexpected rise."Several analysts believe that NVIDIA's financial report is a referendum on investments in artificial intelligence and the semiconductor industry.

They point out that NVIDIA's rapid growth will inevitably slow down, and various risks from peer competition to macroeconomics to geopolitics will gradually emerge in the coming years. However, they still believe that the good times can at least temporarily continue.

At the same time, September is considered the weakest month seasonally for the stock market, with the S&P 500 index rising only 44% of the time during this period, with an average return of -1.20%. Bank of America notes that the returns in September and October of presidential election years are also poor, averaging -0.46% and -0.34%, respectively