Nvidia stock (NVDA 0.28%) Earnings season can lead to volatile stock prices, but one analyst thinks Nvidia stock is worth buying now.
Redburn Atlantic analyst Tim Schultz-Melander initiated coverage on the stock this week with a buy rating. Analysts have set a price target of $178, implying a 21% upside from the current share price of $147 at the time of writing.
Despite analyst calls, here’s why investors should wait until the next report before deciding to buy Nvidia stock.
Nvidia must meet high growth expectations
Nvidia is showing early signs of meeting demand for data center hardware that supports artificial intelligence (AI) workloads. Although revenue growth slowed in the second quarter from the previous quarter, Nvidia still posted a 122% year-over-year increase in total revenue. This is unusual for a major semiconductor business.
Analysts are typically more accurate at modeling a company’s short-term financial performance than at predicting stock price movements. According to Yahoo Finance, the consensus analyst forecast is for Nvidia’s revenue to grow 125% this year and 44% next year. Analysts expect the company’s profit to rise 44% next year to $4.12 per share, as strong demand for Nvidia’s data center chips is expected to keep margins strong. are.
Still, I see no reason to buy the stock ahead of next week’s earnings release. The stock’s recent rally since its last earnings release in August may increase the likelihood of another post-earnings decline.
Regardless of what Nvidia reports next week, this stock will still have long-term upside potential from growth in the AI chip market, although it could take several more years to fully realize it. be. By waiting until news comes out, investors can avoid negative surprises that could drive the stock price down after earnings.
