On Thursday, Melius Research adjusted their outlook on shares of NVIDIA (NASDAQ:NVDA), increasing the price target to $195 from the previous $185, while maintaining a Buy rating on the stock. The revision comes with a positive assessment of NVIDIA's revenue prospects, particularly in light of anticipated contributions from Blackwell, NVIDIA's latest data center product line.
The analyst's updated forecast includes a significant revenue increase for the fourth quarter of fiscal year 2025, now expecting $38.0 billion, a jump from the previous estimate of $36.3 billion. This figure represents a year-over-year growth of 72% and a sequential rise of 8%. The Data Center segment is projected to contribute $33.8 billion to this total, marking a 10% quarter-over-quarter increase. Gross margin estimates have also seen a slight uptick to 73.3%, with earnings per share (EPS) anticipated to be $0.84, raised from an earlier estimate of $0.81.
Looking ahead to the first quarter of fiscal year 2026, revenue forecasts have been raised to $41.8 billion from $39.9 billion, indicating a 60% year-over-year increase and a 10% rise from the preceding quarter. The Data Center revenue for this period is expected to accelerate to $37.6 billion, up 11% sequentially. The gross margin projection is adjusted to 71.7%, with EPS expected at $0.90, up from the prior estimate of $0.88.
For the full fiscal year 2026, the analyst now estimates total revenues to reach $195.1 billion, marking a 51% increase year-over-year, with Data Center revenues at $177.0 billion, a 56% rise from the previous year. Gross margin is expected to be slightly lower at 73.8%, with EPS forecast at $4.41, up from the earlier $4.10 estimate.
The firm's projections extend into fiscal year 2027, with revenue expectations set at $238.8 billion, a 22% increase year-over-year, and Data Center revenues anticipated to be $219.4 billion, a 24% rise. The gross margin is estimated to improve to 74.8%, with EPS projected at $5.55, an increase from the previous forecast of $5.10.
The new $195 price target is based on these higher revenue and EPS estimates, applying a multiple of approximately 35 times the firm's fiscal year 2027 EPS estimate. The analyst suggests that this valuation could be conservative, considering it is below NVIDIA's potential EPS growth rate of 50% for the next year. The report concludes by stating that any market weakness should be seen as an opportunity to buy NVIDIA shares.
In other recent news, NVIDIA has been highlighted for its strong financial performance and strategic advancements. NVIDIA surpassed expectations by reporting record-breaking total revenue of $35.1 billion in the recent quarter. The company's revenue outlook for the next quarter aligns with market forecasts at $37.5 billion. However, a temporary dip in gross margins is anticipated due to the early ramp-up of their Blackwell product, but it is expected to recover later in the year.
Analysts from Goldman Sachs (NYSE:GS), Bernstein SocGen Group, Citi, and Deutsche Bank (ETR:DBKGn) have updated their stances on NVIDIA. Goldman Sachs maintained its Conviction Buy rating, increasing the price target to $165. Bernstein SocGen Group and Citi increased the price target to $175 while maintaining an Outperform and Buy rating respectively. Deutsche Bank kept a Hold rating and raised the target to $140.
These recent developments underscore NVIDIA's strong financial performance and strategic position within the rapidly expanding AI industry. The company's Blackwell production is reportedly ahead of schedule, with shipments expected to surpass previous forecasts. The adjustments in the analysts' ratings and price targets reflect the ongoing adjustments in market expectations based on their performance and industry developments.
InvestingPro Insights
NVIDIA's stellar performance and growth prospects, as highlighted in the Melius Research report, are further supported by real-time data and insights from InvestingPro. The company's market capitalization stands at an impressive $3.57 trillion, reflecting its dominant position in the semiconductor industry.
InvestingPro data reveals that NVIDIA's revenue for the last twelve months as of Q2 2025 reached $96.31 billion, with a remarkable year-over-year growth rate of 194.69%. This aligns with the analyst's projections of continued strong revenue growth in the coming quarters. The company's gross profit margin of 75.98% also supports the analyst's forecast of high gross margins in the near future.
Two key InvestingPro Tips shed additional light on NVIDIA's financial health and market position. Firstly, NVIDIA has a perfect Piotroski Score of 9, indicating strong overall financial strength. Secondly, analysts anticipate sales growth in the current year, which corroborates the positive revenue projections outlined in the article.
These insights are just a sample of the valuable information available on InvestingPro. In fact, there are 20 additional InvestingPro Tips for NVIDIA, offering a comprehensive view of the company's financial health and market position. Investors looking for a deeper analysis may find these additional insights particularly valuable in making informed decisions.
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