Analyst rethinks Nvidia stock ahead of earnings

Analyst rethinks Nvidia stock ahead of earnings

Silin Chen

Mon, August 24, 2026 at 7:33 PM GMT+3 4 min read

Shares of Nvidia (NVDA) have gained 15.1% year to date, outperforming the S&P 500 but trailing chipmaking peer AMD (AMD), which has surged 120.1%, and the Philadelphia Semiconductor Index, which has rallied 63.7% over the same period.

Investors are growing more cautious about whether Nvidia can maintain its rapid growth as the AI market evolves. Major cloud providers are now building their own AI chips, while questions mount over whether massive AI infrastructure spending will ultimately pay off.

This week, the market will be watching Nvidia's fiscal second-quarter earnings, which are scheduled for Wednesday, Aug. 26.

How did Nvidia perform in Q1?

Three months ago, Nvidia reported results that continued to support its growth story.

For the fiscal first quarter ended April 26, Nvidia reported non-GAAP earnings of $1.87 per share, beating Wall Street's estimates of $1.76. Revenue came at $81.6 billion, up 85% from a year earlier. It also reported record Data Center revenue of $75.2 billion, up 92% year over year.

Nvidia CEO Jensen Huang has repeatedly argued that the company remains firmly at the center of the AI race.

Related: Morgan Stanley resets Nvidia stock forecast ahead of earnings

"The buildout of AI factories — the largest infrastructure expansion in human history — is accelerating at extraordinary speed," said Nvidia CEO Jensen Huang in a statement. "Nvidia is uniquely positioned at the center of this transformation as the only platform that runs in every cloud, powers every frontier and open source model, and scales everywhere AI is produced."

But Nvidia's strong position in the AI market doesn't make it immune forever to concerns about how long the current spending boom can last.

Big Tech's AI spending is important to Nvidia because Microsoft, Meta, and Alphabet are among its biggest buyers. Their latest capex plans, however, are challenging expectations for another broad surge in spending.

In its Q2 earnings, Microsoft kept its fiscal 2026 outlook unchanged, and Meta raised only the low end of its forecast. Meanwhile, Alphabet increased its guidance to $195 billion to $205 billion from $180 billion to $190 billion, but later saw its stock fall.

Nvidia's first-quarter fiscal 2027 results also highlighted some underlying risks. Of its $58 billion in net income, $13.4 billion came from unrealized equity gains rather than operations, according to a report.

The chipmaker also remains heavily dependent on a small group of major customers, with three hyperscalers accounting for 54% of revenue.

Still, many analysts remain bullish on Nvidia stock.

Citi expects Nvidia stock to trade higher after earnings

Citi is among the firms expecting Nvidia to deliver another strong quarter.

The firm maintained its buy rating and $300 price target on Nvidia ahead of its Aug. 26 earnings report, while raising its fiscal 2027, 2028, and 2029 earnings-per-share estimates by 1%, 2%, and 2%, respectively.

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"We raise our Jul/Oct-Q sales ~1B/1.5B above Street based on revised industry transceiver shipments and expect the stock to trade higher post earnings," Citi analysts led by Atif Malik wrote in a research note sent to TheStreet.

For the July quarter, Citi expects Nvidia to report $93 billion in revenue, about $1 billion above the Wall Street consensus, helped by a continued strong ramp of its B300 chips. The firm expects revenue to rise another 13% sequentially to $105 billion in the October quarter, compared with the Street's $103.7 billion estimate.

Citi also expects Nvidia's next-generation Vera Rubin platform to begin contributing during the October quarter, though memory supply could limit how quickly Rubin ramps. The firm lowered its Rubin unit estimate to 2 million from 2.2 million.

"We believe Nvidia has secured HBM memory supply for 2026/27, which should help Street estimates to move higher," the analysts said.

Beyond chips and memory, Citi said Nvidia is increasingly helping address another constraint on AI expansion: the physical infrastructure needed to build data centers, including land and power.

The firm pointed to Nvidia's credit support for the Ohio PORTS-Pike campus, saying the company's scale and balance sheet could help AI labs and cloud providers finance new infrastructure.

"We see these efforts as a way for Nvidia to facilitate AI factory growth by easing in the short to midterm financing needs of the AI labs and neoclouds," Citi said.

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This story was originally published by TheStreet on Aug 24, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.