Wall Street raises Nvidia share price targets ahead of report. Will the rally continue?

Wall Street is expecting an uptick in performance in chipmaker Nvidia's fiscal 2026 second-quarter earnings report, which will be released on August 27. The main intrigue remains whether the company will include in the report a forecast for revenue from sales of AI chips to China, since the U.S. government has not yet officially granted licenses for shipments. A number of analysts raised their targets for the chipmaker's shares, causing the Wall Street consensus price target to rise by 3% to a record high, despite the fact that the securities have fallen in price for the third day in a row.

At least nine analysts have raised their target price on shares of chipmaker Nvidia just this week. As a result, the consensus target price is up 3% to nearly $194, the highest estimate of all time. That's nearly 11% above Thursday's closing price.

Among those who revised their stock targeting this week, Cantor Fitzgerald has the highest expectations at $240. TD Cowen is close to it - $235. And HSBC has the lowest target at $200. At the same time HSBC raised expectations the most: by 60% at once - at $85. It is followed by TD Cowen - an increase of $70. But Oppenheimer on Wednesday did not change the target and rating, keeping the "Above market" rating and target price at $200, Seeking Alpha writes.

"What we're seeing is a recognition that Nvidia's growth has a solid foundation," Brian Mulberry, a portfolio manager at Zacks Investment Management, told Bloomberg. - Analysts are raising forecasts simply because they have to: this stock is not going to slow down."

Analysts are raising expectations for Nvidia shares amid the downturn gripping the technology sector ahead of Federal Reserve Chairman Jerome Powell's speech on Friday. Investors fear the Fed may refuse to cut rates in September. The S&P 500 fell for the fifth straight day, the Nasdaq Composite and Nvidia itself fell for the third straight day. The chipmaker's stock lost 4.6% in three trading sessions, ending Thursday at $174.

Investors are looking to lock in profits and reallocate funds to less risky market sectors after shares of several large technology companies hit record high valuations, Bloomberg notes.

- "While caution may be warranted in the more cyclical segments of the technology sector, we remain confident in the long-term growth and resilience of the broader artificial intelligence sector," UBS Global Wealth Management Chief Investment Officer Mark Haefele wrote in a note cited by Barron's. He noted that cloud revenue from the three largest platforms grew at an average annualized rate of more than 25 percent last quarter, and profits at the largest tech companies remain solid.

- Wedbush reiterated an Outperform rating on Nvidia's stock and raised its target price for the securities from $175 to $210. "We continue to believe that the growth in announced hyperscaler investments is largely focused on AI infrastructure and particularly benefits Nvidia, which supplies a disproportionate share of the cost of AI servers," Wedbush analysts Matt Bryson and Antoine Legault wrote in a note Thursday. The quote is cited by Seeking Alpha. The analysts note that data center spending by the largest companies in the AI space grew 67% year-over-year and 23% quarter-over-quarter, indicating an acceleration from the first quarter.

- Susquehanna analyst Christopher Rolland raised his target price on Nvidia shares from $180 to $210 and reiterated a buy recommendation on the stock. "While we are raising our forecasts as the supply chain situation remains stable, we note that our estimates for October are slightly below consensus as some estimates already include revenue from [shipments to China of] H20 chips (we continue to exclude it, awaiting an official forecast from the company)," Rolland wrote in a note cited by Barron's. He also pointed out that shipments of these AI chips to China could bring the company about $8 billion in additional revenue in the second half of the year.

- Jefferies analyst Blaine Curtis also excluded revenue from H20 chips from the forecast. "We don't expect Nvidia to include any meaningful sales in China in the forecast as it appears the license deal is not finalized yet," Barron's quoted the analyst as saying in a note. - We haven't seen an official authorization yet."

Analysts expect Nvidia to report double-digit revenue growth for the second quarter. While questions remain about the company's ability to sell products in China, any update to the outlook could be a growth driver, Bloomberg writes. The main uncertainty is whether the company's financial outlook for the third quarter will include sales in China, which requires approval of licenses for H20 chips and involves handing over 15% of the revenue generated to the U.S. government, Barron's notes.

The consensus forecast calls for Nvidia to post adjusted EPS of $1.01 on revenue of $45.94 billion for the quarter, according to Seeking Alpha. In the first quarter, the company reported earnings of $0.81 per share on revenue of $44.06 billion.

So far, the reporting season is giving positive signals for Nvidia: hyperscalers like Meta, Microsoft, Alphabet and Amazon have promised to spend billions on capital expenditures. These four companies account for about 40% of Nvidia's revenue - the chipmaker is likely to be the main beneficiary of their spending, according to Bloomberg.

Of course, with expectations so high, any disappointment in the report could trigger a market-wide correction, the agency warned. "It could have a disproportionate impact if there is some negative surprise," Brian Mulberry, a portfolio manager at Zacks Investment Management, told Bloomberg. - But the likelihood of Nvidia not meeting expectations is extremely Ma."

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