NVIDIA Corporation

(NASDAQ Global Select)
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Bullish +65

NVIDIA Keeps Falling and Wall Street Won’t Move Its Target. Is It Time To Buy?

Analyst downgrade Financial outlook AI-generated analysis

πŸ“‰ NVIDIA stock fell 9% in a week despite doubling quarterly revenue to $96.22 billion, creating a valuation gap between the share price of $216.30 and analyst targets.

πŸ’° Data Center revenue surged 117% to $89.023 billion, accounting for the vast majority of the company's total fiscal 2027 second-quarter revenue.

πŸš€ Management guided third-quarter revenue to $108 billion and expects approximately 70% growth in fiscal 2028, though supply remains the primary constraint.

⚠️ Gross margins are projected to bottom at 71-72% in Q4 due to memory costs before recovering to 72-73% with next year's price increases.

πŸ“‰ Receivables efficiency declined as days sales outstanding rose from 45 to 60 days, indicating customers are taking longer to pay invoices.

πŸ‡¨πŸ‡³ Guidance explicitly excludes China Data Center compute revenue due to ongoing export policy restrictions limiting market access.

πŸ† The company maintains a strong analyst consensus with 49 'Buy' ratings and 10 'Strong Buy' ratings from Wall Street analysts.

πŸ’» CEO Jensen Huang highlighted that each gigawatt of the new Vera Rubin architecture brings roughly $40 billion in revenue compared to $25 billion for Blackwell.

πŸ€– NVIDIA's gross margin of 71.07% significantly outperforms competitor AMD, which trades at a much higher multiple despite slower growth.

πŸ”‹ The bull case relies on the expansion of AI infrastructure beyond GPUs, including power, cooling, and networking sectors.

Bullish Signals
  • NVIDIA reported record second-quarter fiscal 2027 revenue of $96.22 billion, a 105.85% increase that significantly beat the $92.07 billion analyst estimate.
  • Data Center revenue exploded by 117% to reach $89.023 billion, demonstrating overwhelming demand for the company's AI computing solutions.
  • The stock trades at a reasonable 45x earnings multiple compared to competitor AMD's 215x trailing earnings, despite NVIDIA growing twice as fast.
  • Management provided robust guidance for third-quarter revenue of $108 billion and expects approximately 70% growth in fiscal 2028.
  • CEO Jensen Huang stated that demand still exceeds supply, reinforcing the company's strong market position and pricing power.
  • The new Vera Rubin architecture is projected to generate significantly higher revenue per gigawatt ($40 billion) compared to the previous Blackwell generation.
Risk Factors
  • Shares dropped 9% in a week despite strong earnings, creating a 22% gap between the current price and the analyst $264 buy target.
  • Gross margins are expected to bottom at 71-72% in the fourth quarter due to rising memory costs before recovering next year.
  • Days sales outstanding increased from 45 to 60 days, indicating that customers are taking longer to pay their invoices.
  • Guidance explicitly excludes China Data Center compute revenue, limiting total addressable market growth in that region.
  • CEO Jensen Huang noted concerns about customer financing, stating that CoreWeave does not need a backstop.
Full Analysis
NVIDIA (NVDA) shares dropped 9% in a week despite reporting record second-quarter fiscal 2027 revenue of $96.22 billion, a 105.85% increase that beat analyst estimates. The company's earnings per share of $2.22 also exceeded consensus expectations, driven by a massive 117% surge in Data Center revenue to $89.023 billion. However, the stock price has decoupled from these fundamental results, trading at $216.30, which creates a significant gap between current market prices and analyst price targets. Analysts at 24/7 Wall St. maintain a 'Buy' rating with a price target of $263.54, citing high confidence that demand still exceeds supply despite recent volatility. Management guidance for the third quarter projects revenue of $108 billion, with expectations for approximately 70% growth in fiscal 2028. CEO Jensen Huang noted that supply is currently the limiting factor for growth, highlighting a strategic shift where compute power has become the primary revenue driver. The article highlights specific financial risks and operational constraints affecting NVIDIA's near-term outlook. Gross margins are expected to bottom at 71% to 72% in the fourth quarter due to rising memory costs, though price increases scheduled for next year should restore margins to the 72-73% range. Additionally, days sales outstanding have risen from 45 to 60 days as customers take longer to pay, and guidance explicitly excludes China Data Center compute revenue due to export policy restrictions.