The AI chip leader’s upcoming earnings report could reveal new developments that impact the share price.
After hitting a high of $140 in June, Nvidia (NVDA 3.67%) shares have pulled back amid a broader market sell-off, as well as reports that Nvidia’s upcoming Blackwell chip might get delayed.
Despite all that, UBS is sticking with its $150 price target and “buy” rating on the stock. These price targets are usually just an estimate of where an analyst thinks a stock can trade in the near term. Based on the firm’s research, investors might be underestimating Nvidia’s earnings growth potential over the next few years.
Is Nvidia stock a buy?
UBS believes that early shipments for Blackwell could be delayed to the end of January. However, it shouldn’t hurt Nvidia’s revenue in the near term, since it can sell more H200 graphics processing units (GPUs) to customers using them for artificial intelligence (AI) until Blackwell is available.
The firm sees strong commitments from AI researchers and growing demand from enterprises as a positive indicator for Nvidia’s business. Indeed, the growing demand for training computers with AI is not slowing down. AI models are not as sophisticated as they will be in 10 years, and the growing demand for AI training in the data center is the biggest driver of Nvidia’s revenue growth.
Still, if Nvidia confirms a delay of Blackwell in its next earnings report on Aug. 28, it could limit the stock’s gains and even cause a temporary sell-off, since it would introduce a new uncertainty to Nvidia’s business outlook.
UBS’ price target implies 27% upside from the current $118 share price, which would stretch Nvidia’s forward price-to-earnings multiple to an expensive 54. At these lofty share prices, Wall Street traders will be looking for any excuse to take a profit and sell no matter how great Nvidia’s long-term growth prospects look right now.
Given the potential for negative news to impact Nvidia’s share price in the near term, it doesn’t hurt to wait to buy the stock until after the upcoming earnings report.
