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Wall Street is gearing up for a monster earnings report from Nvidia

The average price target on Nvidia is up nearly 8% over the past month, its fastest growth this year.

Luke Kawa

Ever since Nvidia unofficially kicked off the AI boom in May 2023, we’ve tended to see a predictable routine among Wall Street analysts once every three months:

Get blown away by the chip designer’s quarterly results, and immediately ratchet up their price targets for how high the stock can climb thereafter.

However, ahead of Nvidia’s second-quarter report, due after the close on Wednesday, the sell side is trying something a little different. This time, analysts are scrambling to increase their price targets ahead of results, seemingly much more confident in the affirmation they’ll be getting on the longevity of the AI boom and Nvidia’s critical role in facilitating it.

Over the past month, the average price target for Nvidia among analysts polled by Bloomberg has increased by 7.7%, the fastest rate of growth this year. The second-biggest jump in price targets occurred in the wake of the chip designer’s first-quarter sales and earnings beat.

Those seeing more upside in the stock over the past month include:

  • Morgan Stanley, to $200 from $170

  • Piper Sandler, to $225 from $180

  • Susquehanna, to $210 from $180

  • KeyBanc Capital Markets, to $215 from $190

  • Wedbush Securities, to $210 from $175

  • UBS, to $205 from $175

“We believe Nvidia earnings on deck is another positive catalyst for tech stocks that will further remind investors this is still only the bottom of the 2nd inning in the 9 inning game around building out the AI Revolution over the coming years to enterprises/consumers globally,” Wedbush analyst Dan Ives wrote. “We continue to believe from our Asia field checks that demand to supply is 10:1 for Nvidia’s golden chips.”

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Chinese EV titans like BYD, Nio, and XPeng plunged after Trump’s Truth Social post, along with automakers like Tesla and Stellantis that heavily rely on revenue from sales in the country.

EV makers like Rivian and Lucid, which source raw materials and or batteries from China, were also down following the post.

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Companies such as MP Materials — which the US government recently took a stake in — USA Rare Earth, and Critical Metals jumped, suggesting investor bets that the the administration could play a bigger role in ensuring US access to rare earths.

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US stocks sink after Trump says he’s considering a “massive increase” of tariffs on Chinese imports

More tariffs might be back on the menu.

US stocks reversed lower after US President Donald Trump said in a Truth Social post that he is considering a “massive increase” on tariffs of Chinese imports.

Trump said he’s mulling higher levies as well as “many other countermeasures” because of “the hostile ‘order’ that they have just put out” restricting the export of rare earth metals. He also seemingly canceled his upcoming meeting with Chinese President Xi Jinping in South Korea in two weeks, saying “now there seems to be no reason to do so.”

The SPDR S&P 500 ETF, Invesco QQQ Trust, and iShares Russell 2000 ETF all gave up early gains to fall more than 1%. A basket of stocks compiled by Goldman Sachs of US companies that have significant revenue exposure to China is off more than 2%.

Wafer fab equipment stocks Lam Research, Applied Materials, and KLA Corp, which all count China as their top market, are underperforming, as is iPhone seller Apple.

Chip stocks Advanced Micro Devices, Intel, Broadcom, and Nvidia are all getting hit on the news, as rare earths are needed components for semiconductor production. For Tesla, it’s a similar story given its footprint in China and the importance of rare earths for EVs.

There’s also a lot of plain old dumping of recent winners.

Super Micro Computer, Coinbase, and Robinhood Markets are among the biggest laggards since Trump’s post as investors cut risk.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)

The rare earth curbs are far from the only recent example of China stepping up its defense of domestic industry and resources. Qualcomm is the subject of an antitrust investigation, stringent checks of semiconductor shipments are reportedly in place as officials look to keep Nvidia’s chips from entering the country, and separate reporting indicates that US ships will be charged an escalating fee for docking at Chinese ports.

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