Shares of Nvidia (NASDAQ:NVDA) gained over 6% in the early afternoon session on Monday, in part due to Morgan Stanley analysts’ positive assessment of NVDA stock. Specifically, market expert Joseph Moore reiterated his $500 price target on the semiconductor specialist, implying over 22% gains from Friday’s closing price. Fundamentally, artificial intelligence (AI) may continue to undergird the chipmaker’s long-term northbound trajectory.
Still, the present framework presents a blip in the radar for NVDA stock. At one point in July, shares stood at well over a 200% return for the year. However, during the early hours of Monday trading, this metric gyrated above and below this 3X benchmark. Despite the obvious jitters that some investors may be feeling, Moore asserted that Nvidia should enjoy a “healthy upside” regarding its revenue.
On a broader level, the analyst encouraged market participants to focus on the bigger picture, namely AI. “With a backdrop of the massive shift in spending towards AI, and a fairly exceptional supply demand imbalance that should persist for the next several quarters; we think the recent selloff is a good entry point.”
Certainly, Moore’s reiteration of NVDA stock as a “top pick” comes at an ideal moment. Per CNBC, Nvidia will release its second-quarter earnings results on Aug. 23 following the closing bell.
NVDA Stock Could Resume Dominance Following Q2
Although confidence in NVDA stock generally runs high among the analyst community, the upcoming Q2 report could set the tone for what investors might expect in the intermediate term. According to Seeking Alpha, Wall Street anticipates Nvidia to post non-GAAP earnings per share of $2.07 on revenue of $11.06 billion.
Notably, just meeting the consensus would imply EPS growth of 300% and revenue growth of 65%. At the same time, these blistering figures indicate the exceptionally heightened expectations for the chipmaker. Put another way, there might not be much saving grace for NVDA stock if the underlying firm fails to deliver.
Nevertheless, Moore does not seem flustered with the challenge. As CNBC mentioned, “Moore anticipates $500 million to $1 billion of revenue upside to guidance for the July quarter, bringing the quarterly revenue to $11.5 billion to $12 billion.” So, at the highest level, Nvidia could post revenue at 8.5% above the consensus target.
Fundamentally, Moore encourages investors not to “overthink” the bullish narrative underlying NVDA stock. With myriad AI protocols such as ChatGPT running on Nvidia’s graphics processors, the company should get over this current wall of worry relatively easily.
Why It Matters
So far, analysts continue to maintain a consensus strong buy view for NVDA stock. This assessment breaks down as 30 “buys,” two “holds” and zero “sells.” Further, the average price target lands at $506.72, implying nearly 18% upside potential. However, Stifel Nicolaus’ Ruben Roy did issue a “hold” rating within the past week, suggesting some concerns rising about NVDA.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
