In a significant move ahead of NVIDIA’s quarterly earnings report, financial services giant UBS has substantially increased its price target for the chipmaker’s stock. The firm raised its outlook to $205 from $175, reaffirming its Buy rating on NVIDIA (NASDAQ: NVDA). This optimistic adjustment is primarily driven by an anticipated surge in data center revenue, highlighting the continued insatiable demand for artificial intelligence computing power.
UBS analysts project that NVIDIA will post fiscal second-quarter revenue of approximately $46 billion, potentially exceeding prior estimates by around $1 billion. Looking further ahead, the firm issued a robust forecast for the third quarter, estimating revenue between $54 billion and $55 billion, excluding the Chinese market. If contributions from China are included, this figure could climb as high as $57 billion. This bullish sentiment is supported by supply chain analysis, which indicates compute revenue could see a massive 20% to 25% sequential growth.
Despite facing some supply constraints, NVIDIA’s networking revenue is also expected to remain strong at around $6 billion. When combined with the projected compute growth, this could push total data center revenue close to an unprecedented $49 billion for the upcoming quarter. However, UBS did note potential headwinds, including more challenging year-over-year comparisons for NVIDIA’s gaming segment following a very strong previous quarter.
The analysts also addressed the complex situation in China, pointing to the potential reuse of written-down H20 processor inventory. Simultaneously, they indicated that NVIDIA is proactively preparing for future demand and possible regulatory shifts. The company has reportedly placed new orders for its current “Hopper” architecture wafers and continues developing a “Blackwell” version, all while anticipating that the U.S. government might further tighten export controls as part of ongoing rare earth negotiations.
