On Thursday, UBS reaffirmed its confidence in NVIDIA Corporation (NASDAQ:NVDA) stock, maintaining a Buy rating and a price target of $150.
The endorsement comes despite a recent dip in the company's stock price following its third-quarter guidance, which suggested a slight shortfall in investor expectations. Additionally, NVIDIA's forecasted gross margin for the fourth quarter (ending in January) indicated a decrease compared to previous quarters.
The firm's analyst highlighted a significant rise in NVIDIA's purchase commitments and supply obligations, a key indicator of potential future growth that has shown substantial increase for the first time in several quarters.
This metric is considered critical by UBS, as it traditionally signals upcoming revenue expansion. The analyst pointed out that NVIDIA's guidance now aligns more realistically with the expected shipment timeline for its new product, Blackwell, which had previously been set at an ambitious pace.
Despite a projected dip in gross margins, UBS is not concerned, anticipating that data center margins will remain relatively steady throughout the Blackwell cycle, similar to the previous Hopper cycle.
The firm's analysis suggests robust revenue growth in the upcoming quarters, particularly starting with the first quarter of the new year when Blackwell sales will commence alongside Hopper.
Furthermore, UBS notes that it is premature to anticipate a market peak, as major cloud service providers are still reporting increased demand and extended commitments from their customers. This trend does not indicate an imminent downturn, according to the firm's perspective.
In conclusion, UBS has made slight adjustments to its model for NVIDIA, but the estimated earnings per share for the calendar years 2025 and 2026 remain unchanged at $4.87 and $5.67, respectively. The price target for NVIDIA's stock continues to be set at $150, and the Buy rating is sustained.
In other recent news, NVIDIA Corporation has been the focus of numerous analyst updates following its latest financial results. Cantor Fitzgerald maintained an Overweight rating and a $175.00 price target, emphasizing NVIDIA's solid performance despite concerns related to the delay of the Blackwell product. The firm also increased its calendar year 2025 earnings per share (EPS) estimate for NVIDIA to $4.00.
Similarly, Jefferies maintained a Buy rating with a $150 target, despite earnings falling short of heightened expectations, and highlighted strong demand for NVIDIA's Hopper products.
KeyBanc also reaffirmed an Overweight rating and a $180 target, citing NVIDIA's leadership in the General AI sector and its ability to navigate the Blackwell GPU delay.
Barclays reiterated an Overweight rating with a $145 target, highlighting key developments that suggest a positive trajectory for NVIDIA, despite the company's guidance not meeting market expectations. DA Davidson maintained a neutral stance with a $90 target, noting NVIDIA's robust revenue growth, especially in the Data Center sector.
These recent developments underscore NVIDIA's strong positioning in the market and the high demand for its products, particularly the Blackwell and Hopper platforms.
InvestingPro Insights
UBS's continued endorsement of NVIDIA Corporation (NASDAQ:NVDA) aligns with several positive indicators from InvestingPro data. NVIDIA boasts a remarkable revenue growth of 208.27% over the last twelve months as of Q1 2025, and even more impressive, a quarterly revenue growth of 262.12% for Q1 2025. These figures underscore the company's significant expansion and potential for future growth that UBS alluded to in their analysis.
InvestingPro Tips further support this optimistic outlook, noting that NVIDIA has a perfect Piotroski Score of 9, suggesting a very healthy financial state, and analysts anticipate sales growth in the current year. The company's prominent position in the Semiconductors & Semiconductor Equipment industry is also highlighted, which may be a contributing factor to its robust revenue growth.
With a high return on assets of 70.1% for the last twelve months as of Q1 2025, NVIDIA demonstrates its efficiency in converting investments into profit. For investors seeking additional insights, there are over 19 InvestingPro Tips available, offering a comprehensive analysis of NVIDIA's financial health and market position. These tips can be accessed for more in-depth details on the company's performance and projections at: https://www.investing.com/pro/NVDA.
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