After Nvidia's third quarter performance guidance failed to satisfy investors, the stock fell 6.38% on Thursday. But Wall Street doesn't seem to be worried and unanimously believes that this is a buying opportunity.
Nvidia expects its third quarter revenue to be approximately $32.5 billion, which will increase by 80% compared to the same period last year and exceed the average analyst estimate of $31.7 billion. However, the market's highest expected revenue for Nvidia in the third quarter reached $37.9 billion, which has raised concerns that its explosive growth is weakening.
However, analysts say Nvidia's performance reinforces the view that the company still has a long way to go in the coming years to deliver billions of dollars worth of artificial intelligence graphics processing units (GPUs).
Here are Wall Street's comments on Nvidia's financial report:
Bank of America: Ignoring Quarterly Noise
Bank of America analyst Vivek Arya reiterated his "buy" rating on Nvidia, calling it the "best industry choice" and raised its target price from $150 to $165.
Although Arya acknowledges that a delay of several months in the release of Nvidia's next-generation Blackwell chips may lead to a "good, but not very good" third quarter, he says the company's long-term prospects are very strong and cannot be ignored.
We still believe in Nvidia's unique growth opportunities, execution capabilities, and dominant market share of over 80%, as the deployment of generative artificial intelligence is still in the first 1-1.5 years, with an initial investment cycle of at least 3-4 years, "he added.
Arya also stated, "Importantly, the next generation of artificial intelligence models will require 10-20 times more computing power to train (Blackwell only has 3-4 times more computing power than Hopper). This should mean that demand for Nvidia's next generation GPU chip Rubin, expected to be released in 2026, will not decrease
Finally, Arya stated that Nvidia has provided investors with a 'convincing valuation'. According to the bank's expectations for 2025, its P/E ratio is expected to be 30 to 35 times, and earnings per share are expected to increase by 40%.
JPMorgan Chase: Blackwell chip delay will not affect revenue in 2025
JPMorgan Chase stated that a two month delay in Blackwell's shipment will not have a negative impact on the company's expected revenue for 2024 and 2025.
We believe that demand for Blackwell is very strong and will exceed supply at least until mid-2025, "said Harlan Sur, an analyst at the bank
Sur stated that the strong demand for Nvidia's previous generation Hopper chips will help fill the revenue gap left by Blackwell, and given the strong demand environment for artificial intelligence, there is still potential for chip demand to rise.
Most importantly, NVIDIA continues to maintain a 1-2 step lead over its competitors with its silicon/hardware/software platform and strong ecosystem. Over time, the company is further distancing itself with an active pace of new product releases and more product segmentation, "he added.
JPMorgan Chase reiterated its "overweight" rating and raised its target price from $115 to $155.
Goldman Sachs: Nvidia offers balanced risk return profile
Goldman Sachs analyst Toshiya Hari is encouraged by Nvidia's expected growth in Blackwell products in the fourth quarter, continued strength in Hopper, and a doubling of Nvidia's network business revenue.
The analyst said that in the most optimistic scenario, if Nvidia's data center business can achieve a 100% annual growth rate next year, the company's stock price could soar 89% to $230 per share.
Hari's most pessimistic prediction is that if Nvidia's data center revenue from major cloud service providers drops by 25% year-on-year, the company's stock price will drop by 60% to $47.
Ultimately, for investors, a 90% upward outlook and a 60% downward outlook represent an attractive risk return outlook.
Other Wall Street bigwigs
Nancy Tengler, CEO and Chief Investment Officer of Laffer Tengler Investments
"We believe that selling is an opportunity to increase our stock holdings. This is not an Internet foam. Traditional economic companies are embracing AI to improve their profit margins. Oversized companies are still expanding at a scale of about 50 million dollars per company, with a year-on-year growth of about 79%."
Gabelli Funds Portfolio Manager John Belton
This is a solid 'paper validation' quarter. Basically, everything is on track. Profit expectations are on the rise. As long-term investors, we won't be troubled by the idea of 'exceeding expectations by how much'. Nevertheless, the idea of Nvidia becoming boring may be a healthy thing for the stock and even the entire stock market
James Demmert, Chief Investment Officer of Main Street Research
The decline in Nvidia's stock price is an invitation for investors to buy the stock, especially for those who missed the bigger buying opportunity in early August. Nvidia's strong performance this quarter indicates that its valuation is reasonable and there is still greater room for the stock price to rise