Nvidia Corp. delivered record revenue in the second quarter, topping Wall Street estimates, but its stock fell 3% in after-hours U.S. trading and slid nearly 3% in Frankfurt Thursday. The pullback reflected concerns that the company’s guidance, though ahead of consensus, may not be strong enough to sustain the meteoric rally that has added $2 trillion to its market value since April.
However, J.P. Morgan reiterated its “Overweight” rating on Nvidia, raising its price target to $215 from $170 previously, citing robust demand drivers across data-center, networking and future product ramps.
“We see a sufficient ramp in the supply chain for Blackwell/Blackwell Ultra rack volumes to comfortably support the incremental ~$5B of compute revenue implied by Nvidia’s guide,” the J.P. Morgan analysts said. They noted that networking revenue jumped 46% sequentially in the quarter, while Blackwell GPU compute revenue grew by 11-12%.
J.P. Morgan also flagged upside from the company’s H20 chips, estimating potential revenue of $2 billion to $5 billion in the third quarter, should U.S. export restrictions ease further.
The chipmaker reported July-quarter revenue of $46.7 billion, surpassing analyst expectations of $46.05 billion. Net income surged 59% year-over-year to $26.4 billion, or $1.05 a share, topping consensus of $1.01. Nvidia forecast October-quarter revenue of about $54 billion, plus or minus 2%, ahead of Wall Street’s $53.1 billion view.
J.P. Morgan ups earnings forecasts
On the back of Nvidia’s results, the brokerage raised its adjusted earnings-per-share forecast for fiscal 2026 to $4.53 from $4.27 and for fiscal 2027 to $6.63 from $5.39.The analysts projected that Nvidia’s 12-month forward order book continues to outstrip supply, underpinned by an AI infrastructure build-out that shows little sign of slowing. They also highlighted networking as a standout, with revenue up roughly 140% in the past two quarters.
Market risks ahead
Despite the optimism, J.P. Morgan cautioned that risks remain. Any slowdown in PC gaming demand, geopolitical disruptions affecting Chinese sales, or reduced hyperscaler adoption of GPU-accelerated computing could weigh on Nvidia’s revenue trajectory.
Still, the brokerage sees Nvidia well positioned. “All in, the playbook remains the same here for NVDA – a solid beat and raise with multiple levers at play to drive upside, against the backdrop of a multi-year runway of growth for AI infrastructure spending,” J.P. Morgan said.
Also read | Explained: Nvidia Q2 results beat estimates. So why did the stock fall?
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