A 30% Increase in One Week! Wall Street Increases Bets on NVIDIA Ahead of Earnings Report, Target Price Soars

NVIDIA's stock price opened high and continued to rise this Monday, with an intraday increase of over 6% and a peak increase of nearly 7%. It is expected to reach a new high since the 6% rebound last week, erasing almost all the declines this month.

On Wednesday, August 23, NVIDIA will release its second-quarter earnings report. Wall Street Journal pointed out last weekend that NVIDIA's Q2 financial report will be the biggest test for the current AI boom. Currently, analysts have high expectations for NVIDIA's financial report, but if NVIDIA fails to meet its targets, it could seriously hinder the AI boom and impact tech giants such as Microsoft, Alphabet-C, Meta Platforms, and its old rival AMD.

Prior to the release of the earnings report, NVIDIA's stock price surged, reflecting the market's heightened optimism for NVIDIA's anticipated performance. Recent analyses that have raised NVIDIA's target stock price are increasing.

Media reports on Monday found that the average target price for NVIDIA given by Wall Street institutions has been continuously rising, currently exceeding $520, which is about 30% higher than the $505 a week ago.

A target price of $520 means that analysts expect NVIDIA's stock price to rise by about 20% from last Friday's closing price, surpassing the level of around $460 during Monday's trading session by more than 10%.

Morgan Stanley, UBS, and Rosenblatt Securities have recently raised their target prices for NVIDIA. HSBC, KeyBanc Capital Markets, and BMO Capital Markets have all raised their target prices before NVIDIA's Q2 report.

Since the beginning of this year, NVIDIA's stock price has risen by more than 210%, far outperforming the overall chip stock market. The Philadelphia Semiconductor Index has risen by less than 40% this year. As the dominant player in artificial intelligence (AI) chips, NVIDIA's soaring stock price is widely regarded as the main beneficiary of the AI boom and a benchmark for AI concept stocks.

Overall, Wall Street expects NVIDIA's financial report to show a significant increase in demand for AI service chips, with Q2 revenue expected to grow by 65% YoY and earnings per share (EPS) expected to surge by 306% YoY.

Several institutions that have raised their target prices have expressed a positive outlook on NVIDIA.

HSBC analysts, who have given NVIDIA a buy rating, stated that market expectations for NVIDIA and the entire AI supply chain have clearly risen. However, HSBC expects the bullish momentum for AI servers to continue to exceed market expectations.

KeyBanc Capital Markets expects NVIDIA's performance and prospects to be "significantly higher than" consensus expectations, given the strong demand trends. Morgan Stanley said, "A large amount of spending is shifting towards AI, and Nvidia is still our top choice"; UBS said Nvidia is "simply the king, with a wave of capital and new financing tools chasing new AI software and professional cloud infrastructure."

Hans Mosesmann, an analyst at Rosenblatt Securities, who raised the target price to $800, said that with unparalleled advantages in compilers, libraries, and software tools, Nvidia can overcome hardware specification challenges and drive recurring software revenue.

However, behind the optimism, there are concerns about supply shortages and fierce industry competition.

Due to difficulties in meeting order demands, Nvidia is facing supply shortages as its main supplier, TSMC, struggles to keep up. UBS analysts pointed out that the surge in demand has led to a delay of six to nine months in the delivery cycle of Nvidia's important AI chip, H100.

Ross Seymore, a Deutsche Bank analyst who still maintains a hold rating on Nvidia, acknowledges that Nvidia's earnings report will be "impressive" and that AI will bring more upside potential. However, he points out that "cyclical risks may make it difficult to predict the magnitude and slope of the company's future growth," and the "earnings benchmark" under high expectations from buyers may be harder to meet.