Nvidia shares fall despite results, guidance beat; Analyst says "buy the pullback"

Investing.com -- Nvidia reported Wednesday better-than-expected Q2 results, and the chipmaker announced a $50B stock buyback program. 

NVIDIA Corporation (NASDAQ:NVDA) dropped more than 4% in premarket trading Thursday.

For the three months ended Jul. 28, the company reported Q2 adjusted earnings of $0.68 a share on revenue of $30.04 billion, beating estimates of $0.64 and $28.68B respectively.

The stronger quarterly results were supported by a 154% surge in data center revenue to $26.27B from the same period a year earlier. 

For Q3, revenue is expected to be $32.5B, plus or minus 2%, beating Wall Street estimates of $31.9B.

The company said it approved an additional $50.0B share buyback plan.

It also said it expected to speed up production of its Blackwell AI chips staring in Q4 and continuing into fiscal 2026.

Nvidia expects to ship "several billion dollars in Blackwell revenue" in Q4, the company said.

The company has guided non-GAAP gross margins to 75.0%, matching consensus expectations. For the full year, gross margins are projected to remain in the mid-70% range, with the implied Q4 margin slightly lower compared to the approximately 75% achieved in FQ3.

Citi analysts said the results and guidance were better than expected thanks to the "robust AI demand strength."

Following the report, analysts at Bernstein raised their price target on the stock from $130 to $155 on NVDA shares.

"Overall the company continues to deliver amid high expectations, and it seems clear that datacenter sequential growth is still well in the cards into year-end," they said.

As such, Bernstein's team believes that “several” billion dollars of incremental Blackwell revenue into FQ4 "should drive solid further sequential growth, and it feels to us that Hopper could easily continue to show sequential strength as well which might further accelerate things."

The full-year margin outlook was "the one smudge" in the report, Bernstein notes, "which does seem down a bit as Blackwell begins its ramp and H200 mix increases." Still, the investment bank expects the overall gross margin into FQ4 to remain "very respectable" and believes the next year's margins "should overall hold in fine."

Separately, Wells Fargo also hiked its price target on Nvidia stock after the spring, from $155 to $165, encouraging investors to "buy the pullback."

"We find it hard to see the negatives in NVDA's F2Q25 print, F3Q25 guide, and/or forward-looking Blackwell cycle comments," the bank emphasized.

Senad Karaahmetovic contributed to this report