Nvidia Corp (NASDAQ:NVDA, ETR:NVD) is set to report its second quarter results amid expectations of robust growth across its data center and compute segments, according to analysts at UBS.
Ahead of the report, the firm raised its price target to $205 from $175 and maintained a ‘Buy’ rating.
Nvidia shares traded hands at about $180 on Wednesday morning, up almost 35% in the year to date.
For Q2, UBS analysts project revenue of $46 billion, marking roughly a $1 billion beat over the previous quarter.
Investors will be watching closely for Nvidia’s guidance, especially around China and H20-related revenue, the analysts noted.
For Q3, UBS expects Nvidia to guide revenue to $54 billion to $55 billion excluding China, or potentially as high as $57 billion if Chinese sales are included.
UBS expects Nvidia’s compute segment to grow roughly 20% to 25% quarter-over-quarter from a $35 billion base in Q2, which could add $7 billion to $8 billion in revenue for Q3, highlighting strong momentum for the company’s AI-focused chips.
While networking revenue faces potential constraints due to shortages in 800G, UBS still forecasts approximately $6 billion for Q3, up nearly $1 billion sequentially. Taken together, this suggests total data center revenue could reach approximately $49 billion.
Gaming revenue, by contrast, may face tougher comparisons following a particularly strong first quarter.
China remains a more uncertain factor, with some customers reportedly discouraged from buying H20 GPUs, though UBS notes that Nvidia placed new Hopper wafer orders following license approvals.
“Net on China, we still see at least a few billion dollars per quarter added back with the 15% license fee being charged by the Trump Administration likely booked as contra-revenue, which we estimate would impact gross margin by 50 to 60 basis points, still a trade-off Nvidia is willing to make,” UBS wrote.
Even accounting for these fees, the bank sees a gross margin of 73.5% as a reasonable target for Q3.
UBS also highlighted the strong demand backdrop for Nvidia chips. Supply chain checks support this optimism, with GPU production estimated up 20% quarter-over-quarter in Q2 and another 30% in Q3, underpinning expectations for roughly 5 million units shipped this year at an approximately $33,000 average selling price in the compute segment.
UBS notes that while supply appears sufficient, demand remains the bigger question, citing delays in flagship models like Deepseek R2 due to limited H20 availability.
The bank also raised its full-year 2027 revenue and earnings estimates, projecting an exit rate of approximately $76 billion per quarter, with earnings per share now expected at $6.85 for 2027, well above the Street estimate of $5.96.
- Updated with share price movement -