Nvidia will report its fiscal second-quarter 2027 results on August 26, in what could be a pivotal event for the broader semiconductor and technology sectors. As the world's leading AI chipmaker, any significant earnings surprise could have implications well beyond Nvidia's own stock. Analysts expect revenue of around $91.8 billion, broadly in line with the company's guidance of $91 billion, plus or minus 2%, with consensus EPS standing at approximately $2.07. Nvidia shares closed Monday at $219.74, trading within reach of their all-time high of $236.54, signaling potential for further upside. The company's latest quarter showed revenue surged 85% year over year to a record $81.6 billion, driven by 92% growth in data center revenue, while EPS of $1.87 topped consensus estimates.
Bank of America analyst Vivek Arya believes Nvidia stock trades at up to a 50% discount and maintains a $350 target price ahead of the August 26 earnings report. Arya values Nvidia piece by piece on its free cash flow, with his analysis showing the shares trading 34% to 50% below fair value. The analyst notes that Nvidia puts only about half of its free cash flow into buybacks, while peers return 75% to 100%, suggesting a larger buyback program could ease earnings quality concerns and lift the trading multiple. TipRanks data shows 36 of 37 analysts rate the stock a Buy, with an average target of $309.94, with even the lowest target at $250 sitting above current prices. However, the stock has dropped after past earnings six times since August 2024, highlighting the risks investors face.
Latest quarterly results and guidance from AI infrastructure companies have provided crucial reassurance about market stability. CoreWeave shares jumped 19% after the cloud infrastructure mainstay's second-quarter adjusted operating income margin of 5% exceeded expectations, while its revenue doubled from a year ago. Similarly, Super Micro Computer added 19% following a strong earnings and revenue forecast for the first quarter. Other AI-related stocks also gained significantly, with Dell Technologies and Micron Technology advancing nearly 10% and almost 5% respectively, while Cisco Systems rose close to 3%. Additionally, U.S.-listed shares of Dutch neocloud specialist Nebius were soared 34%, demonstrating continued investor confidence in AI infrastructure buildout despite Nvidia's recent correction.
On Monday, China's Huawei discussed a new approach to developing advanced semiconductors that would enable it to produce vastly superior chips more quickly. Huawei's LogicFolding approach improves chip performance by stacking computing blocks vertically, so data travels shorter distances within the processor, rather than relying mainly on shrinking transistors. Using LogicFolding, Huawei said it aims to produce semiconductors with performance comparable to 1.4nm chips by 2031, which would still leave Huawei years behind TSMC, which is targeting similar advances by 2028, but would represent a substantially narrower gap than what exists today. This development adds another risk factor to Nvidia's competitive landscape.
On Monday, Nvidia agreed to backstop up to $105 billion in leases at a new Ohio data center campus, raising concerns about the company's expanding role in the AI ecosystem. SB Energy, a developer backed by SoftBank and OpenAI, will build and own the site on a Cold War-era uranium enrichment site in Pike County, with OpenAI signing a 20-year lease. The worry centers on Nvidia selling chips to OpenAI, pledging to invest up to $100 billion under a 2025 partnership, and now backing its rent. However, analyst Vivek Arya from Bank of America says the market is misreading the deal, explaining that Nvidia covers only the leftover gap if OpenAI defaults and the site is re-leased or sold, with the bill capped at $105 billion. The deal gives Nvidia exclusive AI compute provider status on the campus, locking rivals out of scarce land and power, with CEO Jensen Huang noting that 'land, power and shell have become vital in the age of AI'.
