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Nvidia (NVDA) finds itself in the news after UBS reduced its price target on the artificial intelligence (AI) chip giant to $180 from $185 based on new U.S. export restrictions on advanced chips that target China. The price target adjustment, although minor, is on top of other emerging concerns about Nvidia’s near-term decline in gross margins as well as delays in architecture. As shares have risen nearly 270% over the last two years, investors closely monitor any possible cracks in Nvidia’s growth story.
The timing of UBS’s downgrade is also crucial. Relations between the U.S. and China on semiconductor technology are flaring again, and Nvidia’s H20 GPU, originally designed for the Chinese market, is now facing regulatory heat. UBS is projecting a $9 billion hit to Nvidia’s top line, with most of that impact reverberating in its fiscal Q2 and Q3.
As expectations reset, most investors now ask: Is it now time to lock in gains?
About Nvidia Stock
Nvidia (NVDA) is headquartered in Santa Clara, California. Nvidia is the world’s leading maker of graphics processing units (GPUs) and computing platforms for artificial intelligence. It has a market value in excess of $2.3 trillion, producing chips for gaming, data centers, and increasingly, AI workloads.
NVDA shares have risen roughly 25% in the past year, capturing AI-driven demand. Current pullbacks and volatility, however, mirror rising investor wariness, most notably concerning China exposure.
It is valued at 24.94 times forward earnings. That reflects some a premium valuation, as does a price-sales ratio of 18.98x. However, a 0.98x PEG ratio suggests that the stock is not excessively stretched compared to its growth prospects. Its solid fundamentals in terms of a 55.85% profit margin, 112.33% return on equity, and limited debt all support a premium.
Nvidia Beats on Earnings and Eyes Massive Growth
UBS’s new forecast is primarily based on new U.S. licensing regulations affecting Nvidia’s China operations, in particular, the H20 chip. Analysts revised their previous estimates to anticipate a hit to fiscal Q1 revenues of $700 million as well as an overall impact totaling $9 billion. Non-GAAP gross margin expectations have been reduced from 71% to 58%-59%, a sharp reduction.
Still, Nvidia has consistently outpaced analyst expectations over the past four quarters. In the first quarter of its fiscal 2025 (ending January), the company reported EPS of $0.85, beating the consensus estimate of $0.79 by $0.06. This marked its fourth straight earnings beat, following prior surprises of 13.73%, 8.33%, and 11.43%, respectively.
In the future, Wall Street anticipates sustained momentum. The consensus EPS estimate for the upcoming quarter is $0.87, compared to $0.58 for this period one year ago, representing 50% year-over-year growth. In Q3 FY25 (July 2025), EPS is estimated at $0.97, a 49.2% increase from year-ago levels. Annual EPS estimates for FY26 and FY27 are $4.16 and $5.15, respectively, reflecting strong, double-digit growth expectations.
Nvidia's next earnings report is due on May 28, 2025. As spending on AI infrastructure is on the rise while production is gearing up in the U.S., the company’s strong growth prospects keep reaffirming confidence in its long-term plan.
What Do Analysts Expect for Nvidia Stock?
Even with the reduction in price target, Nvidia still has an overwhelmingly bullish analyst consensus. Based on data from Barchart, 43 analysts cover the stock with an overall “Strong Buy” consensus rating. Even though UBS has reduced expectations, most companies still support Nvidia.
The average price target is approximately $170.85, representing 73% potential upside from current levels.
