NVDA Earnings: Here's What Analysts Are Saying

After Nvidia (NVDA) posted its quarterly earnings report for fiscal year 2025 Q2 on August 28th, beating analyst forecasts. Afterwards, the stock price dropped, including a one-day loss that set a record for market capitalization drops. A number of recent events may explain investors' apparent caution, including rumors of a subpoena from anti-trust investigators, worries about an industry-wide slowdown in high-speed chip purchases and delays in shipments of its next-generation product. Despite making a bit of recovery over the last few days, $NVDA still sits lower than it did pre-earnings call.

Some analysts brush off the recent price slump and maintain high price targets, while others suspect Nvidia may be in for a short-term correction or a least a slowing of an appreciation trend that has seen the shares rise by triple-digit percentages in 2024.

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Nvidia Business Developments

For almost any other firm, Nvidia's second-quarter 2025 earnings represented the business equivalent of a home run. Revenues topped $30 billion, a robust 122% improvement over the same quarter last year and even ahead of optimistic consensus analyst forecasts. Net income increased by a still-more impressive 168% over second-quarter 2024 to nearly $16.6 billion. CEO Jensen Huang released guidance suggesting revenues would continue improving in the next quarter as the company prepared to begin volume shipments of its new Blackwell chip.

Yet investors responded by shunning the stock, which slumped moderately in trading the following day. In the next session after the Labor Day market closure, Nvidia shares fell nearly 10%. The resulting loss of nearly $280 billion in market capitalization represented a Wall Street record. Since this epic collapse, Nvidia has traded in a narrow range around $106, well below its 52-week high of $140.76.

Nvidia's recent stock market performance has been blamed on a number of factors. One is that even its stellar earnings report could not match investors' unrealistic expectations. Another is that Huang failed to indicate precisely how much the new Blackwell chip would contribute in the fourth quarter. Looming over all is a widespread perception that global enthusiasm for AI is beginning to wane. As something of a sideshow, the company reportedly got subpoenaed as part of a Department of Justice antitrust investigation, but this issue has somewhat subsided after Nvidia denied receiving the subpoena .

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Analyst Expectations

As befits the S&P 500's top-performing stock for 2024, Nvidia gets a lot of analyst coverage. The company's investor relations webpage lists nearly 50 financial institutions with analysts assigned to the stock. The majority have been bullish, with some pegging price targets as high as $200. They remain generally positive about the stock today, after its 10-for-1 stock split in June, with some exceptions.

One analyst perspective on Nvidia holds that it is a victim of its own success. After its share price increased by more than 100% during 2024, to the point the company became valued at more than $3 trillion, the most optimistic among its investors are now capable of being disappointed by even impressive results like the ones Nvidia reported for the second quarter. As a result, the stock declined after its earnings release. Not everyone agrees with this assessment. Cantor Fitzgerald analyst C.J. Muse continues to rate Nvidia a buy with a $175 price target following the earnings report.

Another viewpoint examines details of the quarterly performance, particularly comments made by company leaders during the earnings call. In that call, Huang and CFO Colette Kress indicated its new Blackwell chip would contribute billions of dollars of sales during the fourth quarter. This is three months behind the original schedule for volume shipments of Blackwell and, importantly, the two didn't indicate whether the sales boost would be only a few billions or several billions. That raised questions about whether Blackwell would significantly boost revenues during fiscal 2025. Seeking Alpha cited this issue among others in downgrading Nvidia from a sell to a strong sell.

A more macro issue is the sustainability of global demand for AI. Experts have recently questioned how long corporations will continue ordering billions of dollars' worth of Nvidia AI-related chips and systems when, to date, few companies can point to significant profits from AI investments. Morgan Stanley analyst Shawn Kim has expressed the opinion that the chip business is approaching a peak in its sales cycle. If correct, that may not allow Nvidia's revenues to continue increasing into next year. Meanwhile, as recent events indicate, investors are poised to punish any perceived failure to live up to even inflated expectations.

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Bottom Line

Nvidia's recent business performance remains excellent, with huge increases in revenues and profits. However, investors have pulled back from the stock due to a combination of factors. Analysts cite unrealistic expectations, potentially disappointing or delayed revenues from an important new product and a possible global slowdown in corporate investment in AI among reasons for the recent cooling of investor interest in Nvidia. For first time in a while, some analysts are less than sanguine about Nvidia's prospects, but others remain optimistic that the company, which commands a dominating share of the global market for high-speed chips used in AI systems, still has a long way to run.

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