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Nvidia (NVDA) shares are retaining momentum ahead of the AI darling’s second-quarter earnings scheduled for after the bell on Wednesday, Aug. 27.
The NVDA quarterly release is broadly expected to offer valuable insights into the state of the AI trade. Consensus is for the chipmaker to earn $0.94 a share in Q2, up nearly 45% year-over-year.
Nvidia stock has been in a sharp uptrend since President Donald Trump’s “Liberation Day” tariff announcement. At the time of writing, it’s up roughly 110% versus its year-to-date low set on April 4.
Nvidia Stock Has Little Margin for Error
According to Jacob Falkenscone, the head of investment strategy at Saxo Bank, NVDA shares are trading at a premium valuation heading into the earnings release on Aug. 27.
This means the semiconductor behemoth has rather “little margin for error … if growth slows or margins disappoint – the downside could be sharp,” he told clients in a research note today.
Moreover, investors may also flinch if Jensen Huang, Nvidia’s chief executive, signals delays in ramping new products, including the firm’s next-gen Rubin lineup and a China-tailored AI chip.
KeyBanc analysts also recently warned that NVDA could come in short of expectations for third-quarter guidance on Wednesday due to uncertainty around U.S. export licenses and pressure from China.
Nvidia itself had flagged an $8 billion hit amid federal restrictions on selling to China in May.
How to Play NVDA Shares Ahead of Q2 Earnings
Speaking recently with the Schwab Network, renowned tech investor Paul Meeks cautioned against starting a new position in Nvidia shares at current levels.
According to him, the semiconductor giant will likely come in ahead of Street estimates on Aug. 27, but the headwinds from U.S.-China tensions still warrant waiting for a pullback before jumping into NVDA stock for the first time.
As a long-term holding, however, Meeks remains bullish on the AI stock and expects it to rally past $200 once the geopolitical dust settles, indicating over 10% upside from current levels.
Nvidia Remains a Buy for Long-Term Investors
In conclusion, while Nvidia shares may be up for short-term volatility after Q2 earnings on Aug. 27, they, nonetheless, remain an attractive pick for the long term.
Heading into the quarterly print, Wall Street also rates NVDA stock at “Strong Buy” with the mean target of roughly $198 indicating potential upside of another 10% from here.
