Sticking With This Nvidia Price Target After Market's Reaction to Earnings

Following Wednesday night’s July earnings report from Nvidia NVDA, which bested market expectations and guided the current quarter above consensus forecasts, we are reiterating our $200 price target.

While the company’s outlook for the current quarter calls for revenue growth near 54% year over year to $54 billion plus or minus 2% and excludes any H20 related China sales versus the $53.46 billion market forecast, the market is reacting to Nvidia’s guidance not living up to the overly lofty expectations that we talked about in Wednesday's Portfolio video.

While the market revenue forecast for the current quarter was $53.46 billion, the range of revenue expectations was $47 billion to $63 billion. The “miss” relative to the upper end of that range is allowing some to call for a slowdown in revenue, but as we pointed out above, the reality is that Nvidia’s top-line guidance still calls for more than 50% year-over-year growth. We also know capital spending on AI and data center infrastructure is moving higher in 2H 2025 compared to 1H 2025, with another leg up set for 2026.

Viewed through a different lens, Nvidia’s revenue guidance for the current quarter, which does not include any H20-related China product, reflects the robust demand for AI and data center demand we’ve been hearing about over the last several weeks from Big Tech as well as CoreWeave CRWV and others. To that, we can add the rising demand for AI infrastructure outside of the U.S. and China.

On the subject of China revenue, during last night’s earnings call, Nvidia shared that the U.S. government began reviewing licenses for sales of H20 to China customers in late July. So far, a select number of its China-based customers have received licenses over the past few weeks, but Nvidia has not shipped any H20 based on those licenses.

Management went on to say that, “If geopolitical issues reside, we should ship $2 billion to $5 billion in H20 revenue in Q3. And if we had more orders, we can bill more.”

To us, that sounds like something between a tariff negotiation and timing issue, but if we had to choose, we would opt for the conservative route taken by Nvidia, especially since the Trump administration has yet to codify its receiving 15% of H20 sales.

Coming off the earnings report and corresponding conference call, others are gently nudging their price targets higher, like Morgan Stanley MS to $210 from $206 or BofA to $235 from $220.

While we could give Nvidia the benefit of the doubt on the China issue, we, too, would rather take the conservative route. As that issue becomes clear, it would give us a reason to revisit our $200 Nvidia price target.

The same can be said for upcoming earnings from Dell DELL on Thursday, as well as September and October monthly revenue reports from the likes of Taiwan Semiconductor TSM and Foxconn HNHPF, as well as comments made at upcoming investor conferences, including the Goldman Sachs Communicopia & Technology Conference that runs from September 8 to September 11. As we move past those near-term events, we’ll revisit our current One rating on NVDA shares as well.

Looking further out, as AI adoption proliferates across the enterprise and other institutions and the consumer, mimicking the ones laid out by the internet, mobile internet and streaming, more data center capacity will be needed. Some estimates call for $3 trillion to $4 trillion in AI infrastructure spending by the end of the decade. Others, like Brookfield Asset Management BAM, see $7 trillion in spending over the next decade. As AI becomes more sophisticated and generative, it will consume more bandwidth, increase network traffic and potentially strain network capacity for other applications. That, of course, keeps us bullish on demand for Marvell MRVL.

When will we start to have concerns about a potential slowdown in demand for AI and data center chips?

Most likely, when AI adoption has hit 50% to 60% and the rate of adoption begins to slow. Remember, internet adoption surged from less than 20% of U.S. households in the mid-1990s to roughly 50% in 2000, and that time frame was a period of massive network expansion with capital spending levels peaking in 1999 to 2000. After 2001, networking capital spending fell sharply. That history is why we will continue to track AI adoption and usage. For now, indications are that adoption remains low, and that keeps us bullish on NVDA shares.

Because the Pro Portfolio has a sizable position in Nvidia, we are not likely to add to the position size. We’ll look for favorable risk-to-reward entry points for members who are underweight the shares, especially as we move into September, a month that tends to be a challenging one for the markets. If upcoming August economic data confirms a rebound in job growth and inflation ticking higher, the outcome of the Fed’s September policy meeting could continue that trend. That could bring an NVDA opportunity.

More Pro Portfolio

At the time of publication, TheStreet Pro Portfolio was long NVDA, MS and MRVL.