Goldman Sachs Warns on NVIDIA Before Q2 Earnings Release, While Morgan Stanley Optimistic About China AI GPU Developments

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As NVIDIA prepares to announce its second quarter earnings tomorrow, both Goldman Sachs and Morgan Stanley have shared their perspectives on the upcoming results. With news of a complete ban on NVIDIA’s H20 AI GPUs in China emerging, Morgan Stanley suggests that this could simplify investor expectations regarding NVIDIA’s fiscal year outlook. In contrast, Goldman Sachs warns that the company’s shares may underperform compared to larger industry peers in the latter half of the year.

Goldman Sachs’ Outlook: Long-Term Optimism Amid Short-Term Concerns

Goldman Sachs maintains a positive outlook for NVIDIA’s long-term prospects despite highlighting potential short-term challenges. The firm points out that historically, the first half of any year tends to be favorable for NVIDIA’s stock, whereas the second half often lacks strong catalysts for growth. They have set a share price target of $200, maintaining a ‘Buy’ rating. The analysts caution that the uncertainty surrounding NVIDIA’s long-term performance can hinder share price momentum, as observed in previous years.

A central element of Goldman’s analysis revolves around capital expenditure forecasts from major technology companies. The expectation of no quantitative upgrades in the latter half of the year may limit NVIDIA’s growth potential, leaving investors looking ahead to the next expenditure cycle anticipated in the first half of the following year.

Goldman Sachs has identified three key factors that will influence NVIDIA’s stock performance in the second half of 2025:

Capital expenditure guidance during the Q3 earnings announcements
Details regarding NVIDIA’s upcoming Rubin AI GPUs
Insights into NVIDIA’s market position in the Chinese AI GPU sector

NVIDIA stock chart showing annual growth to $179.81 USD, up 42.19% over the past year. — NVIDIA has witnessed a 42% increase in share price over the past year, despite challenges faced in the latter half of 2024.

In a more upbeat tone, Morgan Stanley expresses a confident outlook. While acknowledging the cloud of uncertainty that overshadowed NVIDIA during the first half, particularly following the DeepSeek selloff and delays linked to Blackwell, the bank indicates these issues have now receded. Morgan Stanley anticipates NVIDIA to achieve $52.5 billion in revenue for its upcoming October quarter, with some investors even projecting as much as $55 billion.

While Morgan Stanley admits that NVIDIA’s cautious guidance regarding China could temper enthusiasm, they argue that this conservatism, coupled with reports of H20 GPU restrictions, might clarify the company’s outlook, ultimately fostering greater certainty for investors. The bank emphasizes, “A major variable in guidance is how management assesses the China opportunity, considering a few licenses have been granted but future licensing remains unclear.” Analyst Joseph Moore from Morgan Stanley remains optimistic, stating that he still favors the stock due to anticipated growth over the coming year, despite expectations for conservative supply side guidance and considerations regarding the Chinese market.

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