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Ahead of NVIDIA’s second fiscal quarter earnings, which are due tomorrow, investment banks Goldman Sachs and Morgan Stanley have issued their analyses. Reports suggest that China has imposed a complete ban on NVIDIA’s H20 AI GPUs. However, Morgan Stanley believes these reports help to streamline investor expectations for the company’s fiscal year outlook. In contrast, Goldman Sachs warns that NVIDIA’s shares might struggle compared to large-cap peers in the second half of the year.
Goldman Sachs Remains Optimistic About NVIDIA’s Long-Term Prospects But Warns About Short-Term Weakness
In its coverage of NVIDIA’s stock, Goldman Sachs notes that the first half of the year is typically favorable for the company. The bank targets a $200 share price and has a Buy rating on the shares. According to historical trading patterns, vague long-term performance expectations can hinder the stock’s performance in the second half, as seen in 2023 and 2024.
Goldman Sachs highlights three critical factors for NVIDIA’s share price performance in H2 2025: capital expenditure guidance during the third quarter earnings season, details about NVIDIA’s next-generation Rubin AI GPUs, and clarity on its position in the Chinese AI GPU market.
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Key Factors Influencing Goldman Sachs’ Hypothesis
Goldman Sachs bases its hypothesis on mega-cap technology firms’ capital expenditure guidance. As this guidance lacks quantitative upgrades in the second half, NVIDIA’s shares may find few catalysts for further appreciation. Investors are expected to wait for the next expenditure cycle in the first half of the following year.
Morgan Stanley Takes a More Optimistic View
Morgan Stanley takes a more positive stance, noting that while sentiment was unclear during the first half due to the DeepSeek selloff and Blackwell delays, these factors have now passed. The bank expects NVIDIA to report $52.5 billion in revenue for its October quarter but notes some investors are even more optimistic, forecasting $55 billion.
Morgan Stanley believes that NVIDIA’s conservatism regarding China guidance could clear up uncertainties surrounding the company’s outlook and create more certainty for the stock. While management will assess the China opportunity with limited clarity on future licensing, Morgan Stanley’s analyst Joseph Moore still likes the stock at current levels due to anticipated growth over the next 12 months. The bank expects NVIDIA to be cautious about supply-side and China variables.
NVIDIA Stock Chart
A chart showing NVIDIA’s shares have gained 42% over the past year, reflecting weakness in the second half of 2024.
