Nvidia shares edged lower in early Monday trading after analysts at Goldman Sachs kept the AI chipmaker on a key list of recommended stocks heading into its highly-anticipated second quarter earnings next week.
Nvidia (NVDA) shares, the market’s star performer so far this year, were hit hard by the global market turmoil tied to the so-called carry trade in early August, but have since staged an impressive 20% recovery on the back of investor bets that its staggered line of AI chips and processors will hold their commanding market share well into 2025 and beyond.
Investors will get an updated view of that thesis next week, in fact, when Nvidia publishes its second quarter earnings and near-term outlook, with focus expected to center on the impact of reported delays to its new line of Blackwell processors, which begin shipping early this autumn.
Blackwell processors have been touted as faster, cheaper, and more efficient than Nvidia’s H100 ‘Hopper’ predecessors, but could be delayed due to design flaws, according to a report from The Information earlier this month.
Analysts had expected Blackwell to generate revenue for Nvidia starting in the third quarter and find their way into global customer data centers by the year’s final three months.
Nvidia investors will be keying on the impact of reported delays to its new line of Blackwell processors when it reports second quarter earnings next week.
Goldman Sachs analyst Toshiya Hari, who reiterated his ‘conviction buy’ rating on Nvidia, as well as his $135 price target, heading into next week’s earnings update, said the Nvidia demand story remains compelling.
Blackwell delay in focus
“While the reported delay in Nvidia’s Blackwell (i.e., next-generation GPU architecture) could lead to some near-term volatility in fundamentals, we expect management commentary, coupled with supply-chain data points over the coming weeks, to lead to higher conviction regarding Nvidia’s earnings power in 2025,” Hari and his team wrote.
“Importantly, we believe customer demand across large cloud service providers and enterprises is strong, and Nvidia’s robust competitive position in AI/accelerated computing remains intact,” Hari added.
Nvidia told investors in May that current-quarter revenue would rise to around $28 billion, a stronger-than-expected tally that assuaged investors concern about a so-called air pocket created by the Blackwell launch, as some investors had worried that customers would cancel orders for the older H100 chips and wait for the newer system processors to ship later in the year.
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For the the three months ending in July, analysts see Nvidia posting adjusted earnings of 64 cents per shares with revenues rising nearly 90% from the same period last year to $25.6 billion.
“From a stock perspective, we believe the set-up fo Nvidia is constructive, with the stock trading at 42x (next twelve months) consensus EPS or a relative premium of only 46% (vs. its past 3-year median of 151%), and our updated Bull/Bear framework indicates a favorable risk/reward balance,” Hari said.
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Nvidia shares were last marked 0.02% lower in premarket trading to indicate an opening bell price of $124.55 each, a move that would peg the stock’s gain from just prior to the carry trade selloff to around 16.2%.
Related: Nvidia stock tumbles in tech slump amid questions over key chip
The stock was also held down in early Monday trading by news of Advanced Micro Devices’ (AMD) $4.9 billion purchase of privately-owned server maker ZT Systems, which analysts see as expanding the chipmaker’s AI capabilities and its nascent challenge to Nvidia’s market dominance.
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