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Ahead of NVIDIA's second fiscal quarter earnings due tomorrow, investment bank Goldman Sachs and Morgan Stanley are out with their takes for the results. NVIDIA heads into the earnings with reports of a complete ban of its H20 AI GPUs in China, but Morgan Stanley believes that these reports streamline investor expectations about NVIDIA's fiscal year outlook. However, Goldman Sachs warns that NVIDIA's shares might struggle to perform when compared to large cap peers during the second half of the year.
Goldman Sachs Remains Optimistic About NVIDIA's Long Term Prospects But Warns About Short Term Weakness
As part of its coverage of NVIDIA's shares, Goldman Sachs quotes NVIDIA's 2024 performance to outline that the first half of the year is typically the best for the shares, as the second half lacks bullish catalysts. The bank has a $200 share price target for NVIDIA and a Buy rating on the shares. Due to the historic stock trading patterns, the bank's analysts believe that vagueness typically associated with NVIDIA's long-term performance can hold the shares back during the year's second half, as had been the case in 2023 and in 2024.
The key factor that drives Goldman's NVIDIA stock price performance hypothesis is capital expenditure guidance from mega-cap technology firms. As this guidance lacks quantitative upgrades in the second half, NVIDIA's shares find few catalysts for further appreciation, and investors wait for the next expenditure cycle in the incoming year's first half, says the bank.
Consequently, Goldman points to three factors that will be crucial for NVIDIA's share price performance in H2 2025. These factors are capital expenditure guidance during the third quarter earnings season, details about NVIDIA's next-generation Rubin AI GPUs and clarity about NVIDIA's position in the Chinese AI GPU market.
Morgan Stanley takes a more optimistic outlook as it admits that while sentiment surrounding NVIDIA was unclear during the first half after the DeepSeek selloff, reports of Blackwell delays and uncertain data center spend, these drivers have now passed over. The bank notes that while it expects NVIDIA to post $52.5 billion in revenue in its October quarter, some investors are even more optimistic as they have assigned the quarter a $55 billion revenue figure.
Morgan Stanley adds that NVIDIA can be conservative about its China guidance, which in turn might inject caution about the stock. However, it believes that NVIDIA's conservatism, coupled with reports of H20 restrictions in China, will clear up the muddiness surrounding the firm's outlook and could create more certainty for the stock.
"One of the large variables in the guidance is how management will assess the China opportunity, with a few licenses having been granted, but little clarity on future licensing," writes the bank. Additionally, Morgan Stanley notes that while its analyst Joseph Moore "still likes the stock at these levels because of ramp over the next 12 months," the bank also expects NVIDIA "to be conservative on the supply side and China variables."
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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