Goldman Sachs bullish on Nvidia ahead of earnings report

Goldman Sachs has expressed continued confidence in Nvidia as the AI chipmaker approaches its second-quarter earnings announcement scheduled for August 28. Despite a remarkable 153% increase in Nvidia's stock price year-to-date, the shares have faced challenges recently, gaining less than 2% in the third quarter amid market volatility and concerns regarding the sustainability of the AI sector. Since reaching an all-time high in mid-June, Nvidia's stock has declined by 11%. Analyst Toshiya Hari reaffirmed a buy rating for Nvidia, setting a 12-month price target of $135. In a note to clients, he indicated that Goldman Sachs anticipates Nvidia will surpass Wall Street's expectations for its fiscal second-quarter revenue and earnings per share, primarily driven by strong performance in its Data Center segment. Despite potential delays in shipments of the Blackwell chip, Hari believes this will not significantly affect Nvidia's earnings potential for 2025. Hari emphasized the robust demand from major Cloud Service Providers and enterprises, asserting that Nvidia's competitive position in AI and accelerated computing remains strong. He noted that the stock's current valuation, trading at 42 times the next 12-month consensus EPS, reflects a relative premium of only 46% compared to its three-year median of 151%. Furthermore, Goldman Sachs projects that Nvidia's data center revenue will continue to grow at a double-digit rate through 2026, highlighting ongoing opportunities in this critical segment.