Nvidia (NVDA) shares were down 0.3% at $216.74 in early Thursday trading, extending a period of relative underperformance.
The stock has risen 17% this year through Wednesday’s close, well behind the 66% gain in the PHLX Semiconductor Index over the same period.
Nvidia’s earnings report next Wednesday could help narrow that gap, with several analysts expecting the chipmaker to beat market expectations for the July quarter and raise its outlook for the current quarter.
Analysts expect strong Nvidia earnings
Stifel analyst Ruben Roy reiterated a $282 price target on Nvidia in a research note this week.
Roy expects Nvidia to beat consensus expectations of adjusted earnings of $2.09 a share on revenue of $91.96 billion.
His price target is based on a price-to-earnings multiple of 22 times his forecast for Nvidia’s fiscal 2028 earnings.
Oppenheimer also reiterated an Outperform rating and $265 price target ahead of next week’s earnings report.
The firm expects upside to Nvidia’s second-quarter results and third-quarter outlook, driven by Blackwell Ultra.
Its next-generation VR200 is expected to ramp during the current quarter, supporting momentum in the second half of the year.
Oppenheimer projects more than $1 trillion in revenue from GB200, GB300 and VR200 between 2025 and 2027.
The firm said Nvidia continues to maintain a performance-per-watt lead through an annual cadence of AI accelerator introductions.
Oppenheimer also highlighted tokens per minute and cost per token as important measures of AI performance, saying Nvidia remains best in class in training and inference token generation and cost.
The firm’s bullish view also rests on Nvidia’s full-stack AI platform, which includes GPUs, networking switches, NICs, InfiniBand, Ethernet, NVLink and CUDA.
Analysts at Morningstar also said they are looking for another “beat-and-raise” quarter from Nvidia, pointing to strong capital expenditure trends among hyperscalers and enterprises.
Morningstar has a $280 fair value estimate on Nvidia.
Financing concerns remain in focus
Nvidia’s relative underperformance this year has been driven in part by concerns surrounding AI spending, the company’s financing arrangements and increasing competition across the semiconductor industry.
Analysts at Cantor pushed back against concerns that Nvidia is effectively buying revenue through its financial arrangements.
The firm reiterated its Buy rating and said Nvidia’s latest agreement is a “clear signal that the current AI investment cycle will be elongated and durable.”
“We view this less as circular and more facilitating the coming AI buildout while at the same time creating additional competitive moats that will continue to enable NVDA to remain THE AI leader,” the analysts wrote.
Nvidia’s substantial cash generation has also allowed it to invest across the AI ecosystem while returning capital to shareholders.
The company said in May that it was increasing its quarterly dividend to 25 cents a share from a penny and announced a new $80 billion stock buyback plan.
Nvidia also pledged “to return roughly 50% of free cash flow to shareholders this year.”
Next week’s earnings report will provide a key test of Nvidia’s ability to convert continued AI infrastructure investment into revenue growth while addressing investor concerns over financing, competition and the sustainability of spending across the sector.
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