Goldman Sachs expects Nvidia to post a strong second-quarter for fiscal 2027 when it reports on August 26, but analyst James Schneider warns the stock could still drop the day after, as it has in each of the last four quarters. The firm reiterated a buy rating with a $285 price target, implying a 32.73% upside from Nvidia's August 21 close.
Nvidia reports second-quarter fiscal 2027 earnings on August 26, and the stock has dropped the day after results in each of the last four quarters despite posting strong numbers each time. Meanwhile, according to MarketBeat, 52 of the 54 analysts covering the stock rate it a buy, with two rating it a hold and an average price target of $308.01.
The stock closed at $214.72 on August 21, implying a 43.45% upside to that average target.
Goldman Sachs expects a solid quarter but sees the bar as elevated
According to TheStreet, Goldman Sachs analyst James Schneider expects "a solid quarter with meaningful upside to guidance supported by tight GPU supply/demand trends". However, he noted the bar for the stock is elevated given its more than 12% move in two weeks.
Schneider reiterated a buy rating and a $285 price target, based on a 30x multiple. His team's EPS estimates for the second and third quarters sit 6% and 12% above Wall Street consensus, respectively. Even so, the price target still trails the Street average, implying a 32.73% upside.
The team said it will watch the earnings call for details on the customer financing platform, the Vera Rubin AI platform rollout in the second half of 2026, gross margin trends, CPU demand tied to agentic AI, and competitive trends.
Nvidia's own GPU demand is creating stock risk
Nvidia's supply constraints make it harder to beat and raise every quarter, and it isn't certain hyperscalers will lift their capital expenditure plans midyear, which the report said is not good for the next two quarters. As a result, Schneider's team believes Nvidia would need to drop something material, beyond a standard beat-and-raise, for the stock to rise after earnings.
That pattern already played out last quarter: Nvidia significantly increased dividends in its previous earnings report, yet the stock still dropped the next day. This happened even after Bank of America raised its price target.
On August 17, Nvidia agreed to guarantee up to $105 billion to help OpenAI lease a data center in Ohio being developed by SoftBank-owned SB Energy, Reuters reported. On August 10, Nvidia also teamed up with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR to create financing platforms meant to mobilize over $500 billion of third-party capital. Goldman Sachs wants that platform addressed on the earnings call, and Morgan Stanley analysts have shared a similar sentiment.
Analysts noted several downside risks: hyperscalers could slow their AI infrastructure spending, Nvidia could lose market share to increased competition, its profit margins could erode, and supply constraints could persist.
Source: TheStreet
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