Nvidia's shares have soared 161% this year and are now on the brink of a major test.
Nvidia (NVDA 4.55%) saw strong gains in trading on Friday. Shares of the artificial intelligence pioneer ended the day up 4.6%, according to data from S&P Global Market Intelligence.
In a report released this morning, Evercore maintained an Outperform rating on NVIDIA shares ahead of the earnings release and raised its price target to $150 per share from $145. At the time of the report's release, the new price target suggested a 19% upside potential.
In addition to bullish analyst coverage, NVIDIA shares were also boosted by comments this morning from Federal Reserve Chairman Jerome Powell. Powell said the time has come for a shift in interest rate policy, a strong indication that the Fed will cut rates at its September meeting. Lower interest rates tend to be a bullish catalyst for the overall stock market, and a low interest rate environment often fosters particularly strong gains for growth stocks.
As the week comes to a close, attention next week shifts to Nvidia's big earnings report. The AI leader is scheduled to report its second-quarter results after the market closes on August 28. This will be one of the most closely watched events for the stock market this year.
Heading into its highly anticipated second-quarter report, is Nvidia stock a buy?
In its last update, NVIDIA forecast second-quarter revenue of about $28 billion and non-GAAP (adjusted) gross margin of 75.5%. Wall Street expects the company to do even better, with analysts on average expecting revenue of $28.6 billion.
Nvidia has beaten expectations by a wide margin on both revenue and profit over the past year, and the company appears poised to do so again when it reports earnings next week. In particular, capital spending data and guidance from major customers such as Microsoft and Meta Platforms suggest the AI chip leader is well positioned to deliver big revenue beats.
But investors should keep in mind that high expectations ahead of big announcements in the second quarter could also be a source of volatility. Reports that Nvidia may delay the launch of its next-generation Blackwell processors and its outlook is under scrutiny, risking a selloff for the tech giant's shares even if last-quarter revenue and profit beat expectations.
Ultimately, NVIDIA's strong competitive position in the AI space means its shares remain a smart buy for long-term investors, but given the potential for volatility heading into the company's second-quarter report, it may be better to dollar-cost average rather than investing in the company all at once.
Randi Zuckerberg is a former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg and is a member of The Motley Fool's board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
