Goldman Sachs: NVIDIA’s FY27 guidance vastly exceeds expectations; gross margin ‘shoe has dropped’—target price raised to $300

NVIDIA delivered a robust quarterly report, and Goldman Sachs believes three key catalysts will drive the stock to continue outperforming the broader market. NVIDIA reported second-quarter revenue of $96.2 billion, surpassing Wall Street expectations. Management subsequently issued full-year revenue growth guidance of 70% for the calendar year 2027—far exceeding Goldman Sachs’ prior estimate of 55% and the consensus market expectation of 44%. Buoyed by this news, NVIDIA’s stock rose approximately 4% after hours. According to Wind Financial Terminal, Goldman Sachs reiterated its Buy rating on NVIDIA in its latest research note and raised its 12-month target price from $285 to $300—a potential total return of roughly 38% from the current share price. James Schneider and his team at Goldman Sachs noted that the FY27 revenue guidance aligns with the most bullish buy-side expectations, while the clarified gross margin outlook and management’s disclosure of customers’ financial commitments collectively provide a more solid foundation for the stock’s valuation. Comprehensive beat across the board, with data center business leading the way NVIDIA’s overall Q2 results surpassed both Goldman Sachs’ and market expectations. Revenue totaled $96.2 billion—above Goldman Sachs’ forecast of $93.1 billion and the market consensus of $92.4 billion—and represented a 106% year-on-year increase. Data center revenue reached $89.0 billion, exceeding Goldman Sachs’ estimate of $86.5 billion; edge computing revenue stood at $7.2 billion, also surpassing Goldman Sachs’ and market expectations of $6.5 billion. Profitability remained solid as well. Non-GAAP gross margin was 75.0%, matching Goldman Sachs’ forecast and slightly above the market’s expectation of 74.8%; operating margin came in at 66.5%, modestly exceeding both Goldman Sachs’ and market expectations; non-GAAP EPS was $2.22, higher than Goldman Sachs’ estimate of $2.12 and the market’s expectation of $2.09. Inventory rose to $31.6 billion in Q2, up 22% sequentially, with inventory days increasing by four days to 120 days—reflecting proactive inventory buildup ahead of the mass production ramp of Rubin products in Q3. Accounts receivable surged 55% sequentially to $63.1 billion, with days sales outstanding extending to 60 days, indicating extended payment terms under certain large-customer procurement agreements. FY27 guidance vastly exceeds expectations; Rubin ramp-up a major driver The most market-impacting information this quarter came from management’s outlook for fiscal year 2027 (calendar year 2027). NVIDIA expects revenue growth of 70% for FY27—significantly above Goldman Sachs’ prior estimate of 55% and the market consensus of 44%. Management also noted that, absent supply constraints, underlying demand growth would exceed 100%, and supply bottlenecks are expected to constrain actual shipment volumes for the next 18 months. Goldman Sachs estimates that this upward revision implies an additional ~$25 billion in cumulative revenue over the prior $1 trillion target for Blackwell, Blackwell Ultra, and Rubin products spanning 2025–2027. The ramp-up of Rubin products is a key driver behind this guidance upgrade. Management expects Rubin products to contribute approximately 20% of projected revenue in Q3. Goldman Sachs believes this demand outlook reflects accelerating procurement demand from emerging customer segments—including AI labs, neoclouds (emerging cloud service providers), and sovereign clients—not just hyperscale cloud vendors.

Wall Street collectively bullish! NVIDIA earnings imminent—nine analysts raise target prices this week

According to WallStreetCN calculations, among the nine institutions that raised NVIDIA’s target price this week, Cantor Fitzgerald set the highest new target at $240—implying a 36.8% rebound potential from NVIDIA’s Wednesday close, which marked its lowest level since August 1. HSBC set the lowest target among these nine, yet still raised it to $200—indicating an expected 14% upside from Wednesday’s closing price. Notably, HSBC delivered the largest percentage increase, lifting its target by 60%. Specific adjustments were as follows: ・Cantor Fitzgerald raised its target from $200 to $240 (+20%); ・TD Cowen ranked second, raising its target from $175 to $235 (+34.3%); ・Wolfe raised its target from $170 to $220 (+29.4%); ・KeyBanc raised its target from $190 to $215 (+13.2%); ・Wedbush raised its target from $175 to $210 (+20%); ・Susquehanna raised its target from $180 to $210 (+16.7%); ・Morgan Stanley raised its target from $200 to $206 (+2.9%); ・UBS raised its target from $175 to $205 (+17.1%); ・HSBC raised its target from $125 to $200 (+60%). Analysts express confidence in growth visibility Brian Mulberry, Portfolio Manager at Zacks Investment Management, stated: "There is broad consensus that NVIDIA’s growth momentum remains exceptionally strong. Analysts are raising their targets because they have no choice—the stock’s upward trajectory shows no signs of slowing." Cantor Fitzgerald’s analyst CJ Muse and team published their note on Monday, August 18—the institution with the largest target-price increase this week. The report noted that China has been effectively de-risked in Wall Street models: "The objective here is to enable China to build on NVIDIA’s platform—any progress in this direction will be welcomed." Per Bloomberg-compiled data, nearly 90% of analysts covering NVIDIA assign a Buy-equivalent rating. Analysts expect NVIDIA to report double-digit quarterly revenue growth again next week. Strong AI demand and surging capex by tech giants Ahead of NVIDIA’s earnings release, the most recent U.S. earnings season has already signaled strong performance ahead for NVIDIA. Tech giants including Meta, Microsoft, Alphabet, and Amazon—all of which reported quarterly results ending June 30—have pledged multi-billion-dollar increases in capital expenditures. Approximately 40% of NVIDIA’s revenue comes from these four companies. These hyperscalers have stated that even with continued, aggressive investment in data centers, they remain unable to fully satisfy their compute demand.

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