TLDR
- JPMorgan reiterates Overweight rating with $215 price target on strong data center demand
- Q2 revenue of $46.7 billion beats analyst expectations of $46.23 billion
- Blackwell Ultra chips now represent 50% of product mix despite extended lead times
- CEO Jensen Huang projects $4 trillion AI infrastructure spending through 2030
- Stock trades at forward P/E of 38.7, below 10-year average of 60.6
JPMorgan has maintained its Overweight rating on Nvidia stock with a $215 price target following meetings with company leadership. The investment bank’s confidence stems from continued strong demand for the company’s data center products.
Nvidia reported second-quarter revenue of $46.74 billion, surpassing analyst expectations of $46.23 billion. Earnings per share came in at $1.05, beating the anticipated $1.01.
The data center segment drove 88% of total revenue as demand for AI chips continues growing. Lead times for Nvidia’s products remain stretched at “quarters, not months” despite ramping production.
Blackwell Ultra chips now represent approximately 50% of Nvidia’s Blackwell product mix. This marks a sharp increase from earlier quarters as the company scales production.
The extended lead times indicate demand still outstrips supply more than two years into the current AI cycle. This supply-demand imbalance has supported pricing power for the chipmaker.
Strong Customer Spending Pipeline
Major cloud providers have increased their capital expenditure forecasts for 2025. Alphabet raised its capex forecast from $75 billion to $85 billion for calendar year 2025.
Meta Platforms increased the low end of its 2025 guidance from $64 billion to $66 billion. The company could spend as much as $72 billion on infrastructure investments.
Amazon’s 2025 capex could exceed $118 billion based on recent guidance. Microsoft spent $88 billion in its fiscal year 2025 and plans to increase spending further.
These four companies alone plan to spend over $350 billion annually on AI infrastructure. Nvidia stands to capture a large portion of chip-related spending given its market leadership.
CEO Jensen Huang provided an even bigger picture during the company’s earnings call. He expects data center operators to spend up to $4 trillion on AI infrastructure between now and 2030.
Product Development Stays on Track
The company confirmed its Vera Rubin platform remains on schedule for a second-half 2026 launch. This timeline counters recent market speculation about potential delays.
All six chips in the Vera Rubin platform have already taped out at Taiwan Semiconductor. Management reaffirmed expectations for continued growth through calendar year 2026.
The upcoming Rubin architecture could deliver 3.3 times more performance than current Blackwell Ultra chips. This represents another major leap in computing capability for AI workloads.
Gaming revenue provided an upside surprise at $4.3 billion, well above market forecasts. This diversification helps balance the company’s heavy reliance on data center sales.
Valuation Considerations
Nvidia stock currently trades at a price-to-earnings ratio of 49.6. This represents a discount to the company’s 10-year average of 60.6.
Wall Street consensus estimates suggest earnings of $4.48 per share for fiscal 2026. This puts the stock at a forward P/E ratio of 38.7.
The stock would need to rise 56% to trade at its historical average valuation multiple. Analysts project fiscal 2027 earnings could reach $6.32 per share.
Several firms have raised their price targets following the earnings report. Craig-Hallum increased its target to $245 while Benchmark moved to $220.
Nvidia’s venture capital arm recently invested in quantum computing firm Quantinuum at a $10 billion valuation. The company participated in a $600 million funding round for the quantum specialist.
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