Analysts Raise the Bar for Nvidia Stock Ahead of Q1 Earnings

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Nvidia (NVDA) has been among the hottest stocks on the planet in the last 18 months. Since the end of the last bear market in late 2022, Nvidia stock has surged 740%, valuing the company at a market cap of more than $2.3 trillion. 

Those sizeable gains mean the semiconductor giant has returned roughly 20,000% to shareholders in the past decade. So, an investment of $500 in NVDA stock in May 2014 would be worth over $100,000 today.

However, despite Nvidia's monstrous gains, analysts remain bullish and expect the stock to move even higher. In this article, we look at a couple of reasons why analysts think Nvidia might be undervalued.

Jefferies and HSBC Are Bullish on Nvidia Stock

According to a Seeking Alpha report, investment bank Jefferies just initiated coverage on Nvidia stock with a “Buy” rating. The analyst expects AI to account for 25% of semiconductor sales by 2027, up from 5% in 2022. Moreover, Jefferies explained that cloud-based capital expenditures are rising, acting as a tailwind for AI players such as Nvidia. 

Nvidia’s latest AI processor iteration is a GPU (graphics processing units) called Blackwell, which was released recently. These processors are expected to perform AI tasks 2x faster while using less energy compared to Nvidia’s current Hopper chips. 

Separately, HSBC analyst Frank Lee reiterated his “Buy” rating on Nvidia and boosted the stock's price target from $1,050 to $1,350. The new target indicates an upside potential of over 46% from current levels.

According to Lee, Nvidia enjoys strong pricing power across products such as server rack systems and processing platforms, which should allow the company to continue growing rapidly. 

What's the Earnings Forecast for NVDA?

Nvidia is forecast to release its fiscal Q1 of 2025 (ended in April) results on May 22. The consensus forecast calls for Nvidia to increase sales by 251% to $22.9 billion and earnings by 425% to $5.15 per share. By comparison, HSBC analyst Lee expects Nvidia to end Q1 with revenue of $28 billion.

For the full fiscal year, analysts expect sales to rise by 71.3% to $104.37 billion and earnings to grow by 78% to $23.10 per share in fiscal 2025.  

If we zoom out further, Lee estimates earnings per share in fiscal 2026 to touch $45.16 per share, more than 50% higher than consensus estimates of $29.68 per share. The analyst's revenue forecast for fiscal 2026 is $196 billion, almost 50% higher than consensus estimates of $133 billion. 

Investors continue to reset their forecasts, and given Nvidia’s leadership position in the AI chip manufacturing space, it shouldn’t surprise investors if the company beats these lofty estimates going forward. 

Can Nvidia Stock Surge to $2,000?

Out of the 40 analysts covering NVDA stock, 35 recommend “strong buy,” two recommend “moderate buy,” and three recommend “hold.” 

The mean 12-month target price for NVDA stock is $986.01, indicating an upside potential of less than 7% from current prices.  Investment bank Rosenblatt Securities has the highest 12-month price target of $1,400 for Nvidia stock.

According to consensus estimates, Nvidia might end fiscal 2029 with adjusted earnings of $60 per share. So, if NVDA is priced at 30x forward earnings, it might touch $1,800 by May 2028. If it trades at 35x, the stock should be trading at $2,100, indicating an upside potential of over 100% from current levels. 

On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.