Nvidia (NVDA) stock is up about 15.19% year to date at the time of writing, Friday morning, Aug. 21. Meanwhile, the SPDR S&P 500 Index (SPY) is up about 12.17% in the same period.
Nvidia hasn’t only outpaced the S&P 500, but it has also outpaced all other Magnificent 7 members in the same period.
Here is how the other Magnificent 7 members have performed:
- Apple (AAPL) is up 13.87%.
- Amazon (AMZN) is up 12.49%.
- Alphabet (GOOGL) is up 9.94%.
- Microsoft (MSFT) is up 0.13%.
- Tesla (TSLA) is down 19.39%.
- Meta (META) is down 16.53%.
This is an impressive result, considering that Nvidia stock faces volatility near earnings, and results for the second quarter (Q2) of fiscal 2027 are set for Aug. 26.
Nvidia usually manages to beat and raise every quarter, but the stock often dips despite this. In a research note shared with me, Morgan Stanley analyst Joseph Moore and his team outlined their expectations for the earnings report.
Heading into earnings, Nvidia is also making moves to strengthen its long-term position.
Key news for Nvidia stock
Nvidia is in talks with the Korean AI chip designer Rebellions about a possible partnership. The potential deal could be an investment or even an acquisition, Bloomberg reported.
The discussions are preliminary and may not result in a transaction. Rebellions designs AI inference chips, just like Groq. For those who are not familiar, I covered the Nvidia-Groq licensing deal in depth.
The short version of Groq’s story is that Nvidia ensured it has the best inference accelerator. It will be interesting to see how these talks develop, and whether they result in another specialized AI chip for inference.
Another important developing story is that Nvidia is in talks to invest in Cloverleaf Infrastructure, The Wall Street Journal reported.
This could become a significant advantage as Cloverleaf Infrastructure arranges power for data-center projects.
Shutterstock
Morgan Stanley sees strong growth for Nvidia even before Rubin product cycle impact
The team expects strong demand for Blackwell GPUs to lead to another quarter of beat-and-raise results.
Analysts noted that Nvidia has said Rubin will start shipping in Q3. They estimate $91.1 billion in revenue for Q2 and $102.3 billion in Q3.
Nvidia’s guidance for Q2:
- Revenue of $91.0 billion ± 2%.
- GAAP and non-GAAP gross margins are expected to be 74.9% and 75.0%, respectively, ±50 basis points.
- Nvidia is not assuming any Data Center compute revenue from China in its outlook.
- Source: Nvidia
For a reminder of how Q1 results looked, I covered them in depth, along with Bank of America reaction.
Moore noted that Nvidia stock dipped the next day in each of the last four quarters, despite strong earnings.
“We aren’t necessarily optimistic that [the] trend reverses, as the potential drivers of more significant multiple expansion are centered on longer-term issues,” he wrote.
The long-term issues for the stock are:
- Market share versus competitors
- Circular financing concerns
- Gross margin trajectory beyond 2026
- The magnitude of Rubin’s contribution in the second half
He said Nvidia management will be optimistic about these four areas, but without material updates, he doesn’t expect the stock to move higher, assuming the typical results.
The team said there is strong enthusiasm for the Rubin platform, but it is too early to tell whether it will lead to market share gains at the expense of application-specific integrated circuits and AMD GPUs.
Moore reiterated an overweight rating for Nvidia stock and the price target of $288, based on a 22 multiple. He said that the multiple is in line with the broader market and at a discount compared to compute-semiconductor peers such as Advanced Micro Devices (AMD), Broadcom (AVGO), and Intel (INTC).
He noted that the “high market share and gross margins leave limited levers for multiple expansion in the near term.”
Analysts noted downside risks for their price target:
- AI end markets could fail to materialize as expected, and customers would sharply reduce GPU purchases.
- AMD could reemerge as a viable GPU competitor.
- Cloud customers outside of Google could develop competitive custom hardware.
What do other analysts think, and how does Morgan Stanley’s opinion compare?
According to MarketBeat, 52 of the 54 analysts covering Nvidia stock rate it a buy. Two give a hold rating. The average price target is $308.01.
Related: Bank of America’s latest Nvidia alert is a must-read for worried investors
