NVIDIA Corporation

NASDAQ Global Select
Back to all articles
Bullish +65

Nvidia stock jittery ahead of next week's earnings: what to expect

AI-generated analysis

📉 NVDA stock edged 0.1% lower in early Wednesday trading as investors positioned ahead of the August 26 earnings report amid broader semiconductor sector weakness.

🇨🇳 Chinese authorities recently approved shipments of approximately 10,000 Nvidia H200 processors each to ByteDance and Tencent, with potential for further approvals to other domestic companies.

📈 Morningstar expects Nvidia to generate well over $300 billion in data center revenue for calendar 2026 (fiscal 2027) and potentially more than $500 billion in fiscal 2028.

⭐ Morningstar maintains a four-star rating on NVDA with a $280 fair value estimate, citing strong capital expenditure trends among hyperscalers and enterprises.

🔮 Analysts anticipate a 'beat-and-raise' setup for the upcoming quarter, though concerns exist regarding whether the Rubin Ultra product will meet all ambitious technological targets.

💰 Nvidia currently holds a 74.15% gross profit margin, reflecting its significant pricing power in the AI chip market despite potential debates on memory costs.

🤝 Morningstar is monitoring Nvidia's financing and backstopping of AI infrastructure partners, including recent $500 billion mobilization efforts with large financial asset managers.

📊 Stifel reiterated a Buy rating on NVDA with a $282 price target ahead of the fiscal 2027 second-quarter earnings report.

⚠️ A key risk involves potential delays or reversals of Chinese government approvals for H200 processors, which could impact revenue expectations.

📉 Analysts warn that debates surrounding memory costs and competition in AI inference are more likely to show up in gross margins than in overall demand.

Bullish Signals
  • Strong capital expenditure trends among hyperscalers and enterprises support a likely 'beat-and-raise' setup for the upcoming fiscal 2027 second-quarter earnings report.
  • Chinese authorities have approved shipments of around 10,000 H200 processors each to major clients ByteDance and Tencent, providing a potential incremental revenue tailwind.
  • Morningstar projects data center revenue to exceed $300 billion in calendar 2026 and potentially more than $500 billion in fiscal 2028.
  • The company maintains a competitive position with robust AI GPU hardware, CUDA software ecosystem, networking, and interconnectivity capabilities.
  • Nvidia recently announced a $500 billion mobilization of large financial asset managers to invest in artificial intelligence infrastructure.
  • Stifel reiterated a Buy rating with a $282 price target, expecting the company to beat estimates and raise guidance.
Risk Factors
  • Chinese authorities may delay or reverse approvals for H200 processors, which could result in weaker China revenue than investors expect.
  • Morningstar notes that the Rubin Ultra product expected in late 2027 may not meet all of Nvidia's ambitious technological targets.
  • Debates surrounding memory costs and competition in AI inference are more likely to show up in gross margins than in demand, potentially pressuring profitability.
  • The broader semiconductor sector is experiencing a selloff, creating volatility that could spill over into NVDA even if company-specific fundamentals remain strong.
Full Analysis
Nvidia (NVDA) shares edged lower ahead of its fiscal 2027 second-quarter earnings report scheduled for August 26, as investors weigh potential China revenue impacts and broader semiconductor sector volatility. Analysts anticipate a 'beat-and-raise' scenario driven by sustained strong capital expenditure trends among hyperscalers and enterprises, with the market closely monitoring any updates regarding sales or non-sales into China following recent regulatory approvals. Morningstar maintains a four-star rating on Nvidia with a $280 fair value estimate, projecting data center revenue to exceed $300 billion in calendar 2026. The firm expects the upcoming earnings call to provide critical updates on product roadmap execution, specifically regarding the Rubin Ultra platform expected in late 2027, and the company's financing arrangements with AI infrastructure partners like Sharon AI and Firmus. Stifel reiterated a Buy rating with a $282 price target, noting that while demand remains robust, debates surrounding memory costs and competition in the AI inference space could pressure gross margins. Nvidia currently holds a 74.15% gross profit margin, reflecting its strong pricing power, though analysts warn that margin compression is more likely than a demand slowdown. The article highlights specific risks including potential delays or reversals of Chinese government approvals for H200 processors to major clients like ByteDance and Tencent. Additionally, Morningstar notes that while the Rubin Ultra product will likely launch, it may not fully meet all ambitious technological targets, which could influence investor sentiment ahead of the earnings print.