Nvidia is a great company, but it faces short -term challenges in China – and there is a terribly high price on Nvidia’s actions.
In just under a week, Nvidia (NVDA 1.65%)) will report his income for T2 2025.
For the most part, analysts are optimistic about the report, which were released after the end of the discussions on August 27. Consensual forecasts have the semiconductor company which increases the benefit of 48.5% from one year to the next, to $ 1.01 per share, because the insatiable demand for artificial intelligence (AI) leads to an increase of almost 53% of income to almost $ 46 billion.
It is a lot of money that Nvidia will ratize for a single quarter. This is one of the main reasons why 58 narcotic analysts questioned by S&P Global Market Intelligence Give Nvidia the actions to “buy” or “outperformance”, or an equivalent note – compared to a single analyst who says “sell”.
Image source: Getty Images.
A reason why two analysts are worried about Nvidia
And yet, not everything is unicorns and rainbows for the Nvidia stock. While the final count of the Profits Day begins, two separate analysts of Wall Street sounded on Wednesday morning to raise reserves on the actions of Nvidia and the challenges that await us.
The first was Deutsche BankWhere analyst Ross Seymore has set a price target of $ 155, which implies that the action could drop by 12% in the next 12 months. Usually, the prospect of a short -term loss of 12% in a title would inspire an analyst to recommend selling this stock. But perhaps fearing to deviate too far from the herd on this stock of popular AI, Seymore only reiterated a note of “maintenance” on Nvidia. (Seymore is still one of the half-dozen analysts with neutral notes on Nvidia).
Never mind. If an analyst thinks that Nvidia is a “purchase” or simply a “hold” should probably not concern us as much as Why He assesses the stock as he does. And in the case of Seymore, the answer could not be clearer:
By writing on Streetinsider.com Wednesday, Seymore warns that US commercial restrictions on semiconductor exports to China will cost Nvidia about $ 8 billion in “before” income in the second quarter. Admittedly, a resumption of shipments during the reception of export licenses of the Trump administration should help to rectify this situation by the third quarter. But there is a cost to this solution – in particular, the requirement of the Trump administration according to which, to obtain export licenses, NVIDIA must pay more than 15% of the income it generates in China to IRS.
China representing about $ 17 billion in Nvidia income in the past 12 months, this could represent a trail of $ 2.6 billion on Nvidia’s profits on the following 12 months.
Keybanc Carillonne in
Investment bank Keys Sharing the concerns of Deutsche Bank concerning Nvidia and China. On the one hand, Keybanc plans that NVIDIA could reserve $ 2 billion at $ 3 billion in income by selling H20 and B40 fleas in next quarter. On the other hand, the banker believes that these income is not reliable and depend on the reception of Washington export licenses.
For this reason, Keybanc warns that Nvidia could “exclude China’s direct income” when making income next week, potentially creating a sort of guidance guidance that could send NVIDIa lower actions.
Keybanc also cites the “potential 15% tax on AI exports” on the American side as a risk, and adds that “the pressure of the [Chinese] The government so that its AI suppliers use interior ia fleas “could still alleviate Nvidia China income – adding a third risk that Deutsche has not mentioned!
Finally, good news
Now, I hope I haven’t painted Also Bleak an image for you here. The fact is that, despite his reserves, Deutsche analyst Seymore still expects Nvidia to declare a “typical” profit beaten next week, exceeding $ 45 billion in the company about $ 2 billion. Blackwell returned is increasing, explains Seymore, more than sequentially doubling between the fourth quarter of 2024 and the first quarter of 2025, at 24 billion dollars.
With the prospect of an imminent gains pace, it is logical that Seymore hesitates to recommend that Nvidia shares sell – even if it feels that it is a little too expensive.
In addition, Keybanc agrees that the production of Blackwell increases, and a new ultra blackwell chip (B300) is on the way, potentially increasing revenues in the second quarter. For these reasons and in others, Keybanc not only prunes the Nvidia stock “overweight” (that is to say buy). Keybanc increased his course on action on $ 215 on Wednesday.
So, is Nvidia Stock a purchase or not?
This is the real question, right? Wall Street’s confident Nvidia “will beat” the T2 next week. It is just worried that Nvidia “is missing” on the advice for the third quarter. In the longer term, however, Nvidia Stock is a purchase or isn’t it?
Here’s how I look at it, and I will keep it very simple:
Evaluated at 4.28 trillion Let’s file, winning nearly $ 77 billion in annual profits and supporting this with around $ 72 billion in annual available cash flows, NVIDIA shares cost approximately the end 55 times and approximately 59 times the available cash flows. For NVIDIA shares to be a clear purchase, I would like to see the benefit of the growth in shares at least 50% per year over the next five years.
The best that Wall Street analysts expect Nvidia, however, of annual growth of 30% – even with nine out of 10 analysts interviewed by saying that NVIDIA action is a purchase.
Mathematics here are not difficult. NVIDIA action is not a purchase at this price – but it could be if it sells after the profits.
