Piper Sandler advises buying Nvidia shares ahead of the report. He expects them to rise 23%

Investment bank Piper Sandler expects strong second-quarter results from Nvidia and sees upside potential for the stock. The drivers will be strong demand for semiconductors, the plans of Microsoft, Alphabet and Meta to expand data centers using GPUs Nvidia and the resumption of deliveries of advanced AI-chips in China, according to Piper Sandler. Other analysts, including Bernstein, Wells Fargo and KGI Securities, are also positive on the stock.

Piper Sandler recommended buying Nvidia shares, reiterating an Overweight rating ("Outperform") in anticipation of strong second-quarter results, CNBC writes.

Analyst Harsh Kumar raised the target price of the securities from $180 to $225 per share, which implies growth of about 23% from the current level. Since the beginning of the year, Nvidia shares have already risen by more than 34%.

The analyst noted that he is laying down a possible upside given the recent positive signals from the largest U.S. hyperscale cloud providers. At issue are plans by Microsoft, Alphabet and Meta Platforms to significantly increase capital expenditures next year by allocating a significant portion of their budgets to equipping data centers with Nvidia GPUs, AInvest specified. According to Kumar, this trend, along with the inclusion of revenue from China after the renewal of the export license, could be a powerful driver of growth in a key segment for the company - data center revenue.

Nvidia will publish quarterly reports on August 27. Analysts surveyed by FactSet forecast earnings of $1 per share on revenue of $45.76 billion, CNBC reported.

Nvidia should capture strong demand for its chips, Kumar believes.

"We continue to believe that Nvidia is in a situation where demand exceeds supply, and this is likely to be the case for the rest of the year. Even without China, demand for high-performance computing (HPC) solutions in the U.S. exceeds Nvidia's ability to supply its latest architecture. The situation is partly exacerbated by Nvidia's transition to new server racks and the delayed launch of the GB200 model," the analyst said.

Most analysts are positive on Nvidia: of the 65 experts tracking the stock, 58 recommend buying it, LSEG data shows.

At the beginning of the week, three analysts gave a positive assessment of the company's shares. Stacy Razgon of Bernstein reiterated a buy recommendation on Nvidia shares, leaving unchanged the target price of $185, which is almost the same as the closing price on August 12 ($183). Wells Fargo raised its target price on Nvidia shares to $220 from $185, maintaining an "above market" rating. Its estimate implies a 20% upside for the stock. KGI Securities raised their target price on shares of Nvidia from $186 to $207, reiterating an "outperform" rating. Its valuation implies a 13% upside.

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