Piper hikes price target on Nvidia stock, expects another earnings beat

Investing.com -- Piper Sandler hiked its price target on Nvidia (NASDAQ:NVDA) to $225 from $180 ahead of the tech giant’s earnings report due later this month, citing expectations for another solid print and strong demand trends into the second half of the year.

The brokerage said it sees “upside to numbers for both the July and October quarters,” supported by robust U.S. hyperscaler spending and the inclusion of China revenues.

Piper also said that “guidance and commentary around China revenue for the October quarter” will be a key focus of the earnings call, as orders from Chinese customers could balloon given perceived urgency to secure supply.

For the July quarter, Piper is modeling revenue of about $45.1 billion, roughly in line with Nvidia’s original guidance and just below Street estimates of $45.7 billion.

Analyst Harsh V. Kumar said there is potential for “slight upside” given Nvidia’s history of modest beats and easing supply constraints in its data center business.

China sales are expected to begin contributing meaningfully in the October quarter, with Piper estimating $5.5 billion to $6.5 billion in revenue from that market during the period.

Kumar pointed to the recent “15% cut of revenue” deal with the Trump administration, which allows resumed shipments of advanced AI chips to China, as a catalyst for the October and subsequent quarters.

He added that this agreement could weigh on gross margins for the Chinese business by roughly 15%, bringing them to about 60%, even though the H20 chip carries margins “at par or slightly higher” than Nvidia’s low-70% overall rate.

He expects China demand to ramp quickly, reaching around $10 billion by the January quarter and potentially $50 billion annually by fiscal 2027 under current terms.

"China demand in our view could amount to ~$6B in sales for the October quarter and further ramp from there at a ~12-15% growth rate moving forward in a normal quarter," Kumar said.

The analyst also highlighted “elevated and resilient” hyperscale capital expenditure (capex) in the U.S., with major cloud providers signaling increased investment in compute capacity over the next few years.

While Nvidia remains in a “demand greater than supply situation,” Kumar believes the company is well positioned to meet strong order flow from both U.S. and Chinese customers.

He also argued that gross margins in the October and January quarters could be temporarily boosted by the sale of previously written-off H20 chip inventory.

At $183.16, Nvidia trades at 29.8 times Piper’s fiscal 2027 non-GAAP EPS estimate of $6.15, above the peer average of 26.9 times.

The new target implies a ~37x multiple, which the broker said reflects “peer multiple expansion.”