A divided market and bank optimism: Wall Street prepares for Nvidia report

A breakthrough quarter, getting a third of all cloud providers' investments in AI, record revenue growth, and future growth drivers - what analysts are writing ahead of Nvidia's third-quarter reporting.

Nvidia will publish its financial report on November 19 after the market closes. The publication will traditionally be one of the key market events, as it is the reporting of this giant that can be used to judge the dynamics of demand in the AI sector. But this year, investors see the release as another "meaningful risk" to the market, especially as euphoria about AI has waned in recent weeks, Michael Brown, Pepperstone's senior market research strategist, told Bloomberg.

A few days before the reporting, it became known that two investors at once - Japanese SoftBank and the fund of co-founder Palantir Peter Thiel - in the third quarter completely got rid of Nvidia securities. By the way, SoftBank was Nvidia's largest shareholder until early 2019, but sold all 4.9% of its shares for $3.3 billion. In November 2024, 2024 CEO Jensen Huang reminded SoftBank CEO Masaesi Son of the deal in a conversation with him. Son then pretended to cry on Huang's shoulder. "It's okay, we can cry together," the Nvidia CEO joked.

Now, an analysis of 13F reports from 909 hedge funds shows an equal distribution of investor sentiment toward Nvidia, with 161 funds increasing their investments in the chip giant while 160 reduced their investments in the third quarter, Bloomberg wrote .

Bank of America this week reiterated a "buy" recommendation on Nvidia and said the market is underestimating its "transformation from a traditional PC graphics chip maker to a solutions provider for high-end gaming, enterprise graphics, cloud, accelerated computing and automotive markets," CNBC reported.

Morgan Stanley wrote on Nov. 14 that it expects the quarter to be "kind of a breakthrough" for Nvidia. The bank writes that the company has fully resolved hardware issues and now the bottlenecks to growth are less on Nvidia's side and more on the side of its customers (we're talking about related infrastructure - storage, memory and servers, as well as the availability of space and power). However, none of this should hinder the apparent acceleration in demand, the bank said in its filing.

Morgan Stanley analysts raised their own forecasts for Nvidia's revenue - now they believe that the figure in the third quarter will be $55 billion ($600 million higher than the previous forecast), and in the fourth quarter - $63.1 billion (vs $61.2 billion). In the second quarter, revenue was $46.7 billion.

"Notably, the $8 billion quarter-over-quarter growth ... would be the largest sequential revenue growth in the history of the industry," the bank's analysts wrote. They also clarify that these forecasts do not yet fully reflect final demand.

In a related move, the bank also raised its revenue and EPS forecasts for next year (fiscal 2027), up 7.4% to $298.5 billion and nearly 8% to $7.11, respectively.

The bank writes that for Nvidia, the data center hardware business will be the main growth driver over the next five years, driven by high interest in generative AI and demand for artificial intelligence and machine learning solutions. The widespread launch of Blackwell chips in late 2025 should strengthen Nvidia's market position and increase revenue through more sales.

Analysts believe that the company's report will again emphasize its leadership in AI, and its shares, which have recently lagged behind competitors AMD and Broadcom, may grow. For example, from the beginning of 2025 quotes Nvidia added 35%, and AMD securities, for example - almost 91%.

Morgan Stanley maintained an "above market" recommendation and raised its target price from $210 to $220 in its Nov. 14 report, up 21.3% from the Nov. 18 closing price.

Wedbush maintained an "outperform" rating and $210 target price in a report on November 14, up % from the close on November 18. The company's main driver is the sustained strong demand for AI chips, which analysts believe will continue to grow thanks to a surge in investment from major cloud companies.

In addition to them, startups and government AI projects will also drive demand. Cloud service provider CoreWeave is doubling its capital expenditures in 2027, Anthropic plans to invest up to $50 billion in data centers, OpenAI and its partners in the $500 billion Stargate project are preparing to open new data centers, and South Korea, Saudi Arabia and the UAE are also planning to buy hundreds of thousands of graphics cards, Wedbush analysts list.

Wedbush wrote about the explosive growth in orders for Nvidia systems, including the next generation of Blackwell chips. Shipments of those chips, among others, will be the focus of investors on the earnings call, Wedbush analyst Dan Ives said.

UBS maintained a "buy" recommendation and a target price of $235 in their Nov. 9 report, up 29.6% from the closing price on Nov. 18. This year, the bank estimates that Nvidia will receive about 30% of large cloud providers' total capital expenditures on AI components, underscoring the company's infrastructure dominance.

UBS expects Blackwell chips to become the backbone of Nvidia's data centers by 2026, the company will also begin to noticeably ramp up shipments of Rubin chips.

The key points of concern for investors right now is the chip supply situation in China, writes UBS. In fact, there are none. And then the question remains what Nvidia will do with its stock of B30 chips designed for China. UBS also wrote about possible constraints on Nvidia's earnings per share going forward related to capacity, memory or access to capital at large customers like OpenAI. There is also a concentration risk for Nvidia's large customers.

This article was AI-translated and verified by a human editor