Shares of Nvidia rose in Friday trading as investors awaited the artificial intelligence chipmaker's critical fiscal second-quarter report and a top Wall Street analyst issued a bullish call on its broader impact on the tech market.
Nvidia shares (NVDA) which reports second-quarter results on Aug. 28, has rebounded steadily from its lows earlier in the month, adding more than $600 billion in market value since the yen-carry trade-triggered turmoil that rocked global stocks on Aug. 5.
Equity momentum could also be key to consolidating overall market sentiment heading into the fall. Investors have been questioning the veracity of ai-related investment spending and weighing the impact of the Magnificent Seven tech stocks’ first quarterly underperformance in at least two years.
In fact, Wedbush analyst Dan Ives says Nvidia's earnings will likely highlight “potentially the most important week for the stock market in years,” given that the tech giant has “the best position and vantage point to discuss overall demand for enterprise ai and the appetite for Nvidia's ai chips going forward.”
With those lofty expectations in place, Ives' colleague, Wedbush analyst Matt Bryson, added $18 to his Nvidia price target, bringing it to $138 per share, while maintaining his overweight rating.
Nvidia's Blackwell chip revenue in focus
Bryson said he expects “stronger second-quarter results and solid third-quarter guidance” from the chipmaker next week. He expects a bottom line for the three months ended July of 67 cents a share on revenue of $30 billion.
Wall Street forecasts point to a consensus bottom line of 64 cents per share, more than double (up 137%) from the same period last year. Revenue is also estimated to have doubled to $28.55 billion.
In May, Nvidia told investors that revenue for the current quarter would be about $28 billion. This estimate, stronger than expected at the time, calmed investor concerns about delays in orders for H100 chips related to the launch of its new Blackwell processors.
Related: Goldman Sachs analyst revises Nvidia stock target price ahead of earnings release
Investors will focus on reports that delivery of its new line of Blackwell processors, which are supposed to be faster, cheaper and more efficient than their H100 Hopper predecessors, could be delayed due to design flaws.
Analysts had forecast Blackwell would begin contributing to Nvidia's revenue growth in the third quarter and would find its place in global customer data centers in the final three months of the year.
Hyperscalers are prepared to spend big on infrastructure
That demand, as well as Nvidia's significant market share, is expected to push the group's data center revenue to $150 billion next year, driven largely by the launch of Blackwell this year.
According to Barclays estimates, hyperscalers, the major providers of massive data centers and cloud services, are set to spend around $500 billion over the next two years to build out their massive infrastructure. The goal is to leverage their massive data sets to improve sales of everything from drive-thru restaurants to the most complex pharmaceutical tests.
Still, some analysts are also starting to question the pace of ai spending by hyperscalers like Microsoft. (MSFT) Meta Platforms (GOAL) amazon (amazon.com) and Google's parent company, Alphabet (GOOGL) and the resulting demand for high-end chips and processors produced by Nvidia.
Related: Big names dump Nvidia stock as ai giant stumbles ahead of earnings
Wedbush's Ives says Nvidia's near-term outlook will be crucial to the direction of tech stocks overall. He estimates that “for every dollar spent on an Nvidia GPU chip, there's an $8 to $10 multiplier across the sector.”
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“The stage is set for tech stocks to rally into year-end and 2025… as the Fed prepares to begin its rate-cutting cycle, a macroeconomic soft landing remains the path and ai tech spending remains a generational spending cycle that is just beginning to reach the shores of the tech sector,” Ives said.
Nvidia shares rose 1.2% in premarket trading to indicate an opening price of $125.20, a move that would extend the stock's six-month gain to about 58%.
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