DA Davidson raises Nvidia stock price target to $195 on long-term AI demand

Nvidia reported robust second-quarter earnings, surpassing expectations with $1.04 EPS and $46.7 billion in revenue, and provided optimistic third-quarter guidance of $54 billion. Despite these strong results, shares fell due to slightly softer-than-anticipated data center revenue and persistent concerns over China sales. Nevertheless, analysts such as DA Davidson and Piper Sandler maintained positive long-term outlooks, raising price targets and reiterating overweight ratings, citing sustained demand for AI compute power and potential for significant China revenue in the current quarter.

Analysis

Nvidia delivered strong second-quarter fiscal 2025 results, outperforming market expectations with earnings per share of $1.04 against a $1.01 forecast and revenue of $46.7 billion compared to the anticipated $46.1 billion. The company also provided robust guidance for the upcoming quarter, projecting revenue of $54 billion, which exceeds consensus and notably does not include potential revenue from its H20 chips. Despite these positive results and a 45.4% stock appreciation over the past six months, shares declined following the announcement. This negative market reaction stemmed from data center revenue that was slightly softer than expected and persistent concerns over the company's ability to sell its H200 chips into China amid export controls. Analyst commentary highlights this dichotomy; DA Davidson raised its price target to $195 from $135 based on sustained long-term demand for AI compute power, yet maintained a Neutral rating due to the short-term risks. In contrast, Piper Sandler reiterated an Overweight rating with a $225 target, forecasting that Nvidia could still generate a significant $2 billion to $5 billion in revenue from China in the current quarter.

Key Decisions for Investors

• Investors should weigh the strong fundamental performance, including the revenue beat and exceptionally strong Q3 guidance, against the market's sensitivity to any softness in data center results and the geopolitical risks associated with China sales.
• The significant price target increase from DA Davidson to $195, despite its 'Neutral' rating, suggests that while long-term AI-driven demand is a powerful tailwind, near-term volatility warrants careful position sizing, especially after a 45.4% six-month run-up.
• A critical metric to monitor in the next earnings report will be realized revenue from China, as performance against Piper Sandler's $2 billion to $5 billion forecast will be a key catalyst and a test of the company's ability to navigate export controls.