The Super Bowl of the US stock market! American retail investors watch Nvidia’s financial report conference at a bar

A group of people eagerly arranged to meet at the bar, staring intently at the TV screen next to the table. And what is playing on the screen is not an exciting sports event, but the financial report and performance of a listed company

This scene happened in a bar near Madison Square Park in Manhattan, New York: dozens of investors gathered together, just waiting for the exclusive “Super Bowl” moment of the financial market – the disclosure of Nvidia’s Q2 financial report.

They were drinking beer and red wine while watching CNBC’s live broadcast, and as Nvidia’s financial report was released, they exchanged their respective holdings. Some people expressed that they hope today can be lively and drive the stock price to soar; Others expressed that they only came to enjoy the show, establish connections, or boast about attending the financial report “observation meeting” for the first time in their lives.

As time passed, these investors cheered and cheered during the countdown phase before the release of the financial report, while booing was heard when the stock price fell after hours.

Finally, the gathering came to an end quickly. At 5pm local time, as the stock price fell, the number of people gradually decreased.

Did Nvidia’s latest financial report disappoint them? Perhaps it is.

The graphics chip manufacturer, which has become a cultural phenomenon and symbol of AI frenzy, announced on Wednesday that Nvidia’s Q2 revenue and profit exceeded Wall Street’s expectations, but the growth rate of performance has slowed down compared to recent quarters. At the same time, the Q3 revenue outlook was higher than analysts’ average expectations, but did not exceed those most optimistic expectations, which led to a sharp drop of 8% in its stock price after hours.

Marty Jaramillo, sports injury data analyst at CBS Sports, commented on the stock price trend of Nvidia that day, saying, “This is a bit disappointing. On its own, Nvidia still hit a ‘home run’ today, but they have hit many ‘home runs’ in the past few quarters

He said that people’s expectations may be too high.

In fact, not everyone was optimistic about Nvidia’s performance before this gathering. Some attendees even expressed that they believe the emergence of similar gatherings is itself a signal of market peak. It’s like when everyone is talking about seeking to buy stocks, it’s often the most dangerous moment

The most important stock on Earth

The quarterly financial performance report is a mandatory disclosure for US listed companies. In the past, financial reports rarely attracted such great attention from the outside world, but it is clear that for the entire US market and even the global market, Nvidia is no longer an ordinary company

It is the best performing stock in the S&P 500 index this year, having more than doubled since 2023 and more than doubled since 2024. Nvidia’s market value has currently exceeded $3 trillion, ranking second in the world, and has a huge impact on the direction of the US benchmark stock index. It is also a key indicator that may directly affect investor trading sentiment.

Since entering this week, some market observers have been speculating whether the comments made by NVIDIA CEO Huang Renxun on the quarterly earnings conference call will have a more significant impact on the market than the speech made by Federal Reserve Chairman Powell at the Jackson Hole annual meeting last week. At last week’s central bank annual meeting, Powell released a significant signal that the Federal Reserve is about to cut interest rates.

According to data from Deutsche Bank, in the first few quarters, the market reaction triggered by Nvidia’s financial report was comparable to the market reaction after the release of heavyweight macroeconomic reports such as monthly non farm payroll reports or inflation data in the United States. It’s no wonder that before the release of the financial report, many traders were betting that Nvidia’s market value would fluctuate by around $300 billion after the report was released.

Michael Antonelli, Managing Director of investment firm Baird, said, “People are pushing the entire US stock market onto Nvidia’s shoulders. It seems absurd.”

But investors who have experienced the market trend over the past year are clearly aware, and such descriptions are not even exaggerated. Among retail investors in the United States, Nvidia’s name has almost been placed in everyone’s watchlist for self selected stocks. For some amateur investors who hold NVIDIA, the skyrocketing stock price in the past few years has allowed them to retire early, travel, repay debts, or save money to buy a house.

FactSet data shows that individual investors and small asset management companies currently hold approximately 30% of Nvidia’s stock.

People’s pursuit of Nvidia has even ignited the surrounding area. A hat with the name “NVIDIA Day” printed on it is priced at up to $33, which has almost become a symbol of people’s enthusiasm for NVIDIA’s financial report.

47 year old entrepreneur David Osterweil said he first bought Nvidia stock in 2020 and has been holding the stock ever since, regularly reducing some positions to lock in profits. He said that the profits from investing in Nvidia are helping him pay for his son’s coming of age gift.

He is not worried about Nvidia’s financial performance on Wednesday and stated that the expectations before the report was released were already high. I think over time, this will be a slow and steady climb. This (Nvidia) is still largely worth holding for the long term

Da Mo summarized this financial report and market reaction as the result of a bull market case, but the price action of a bear market. Bank of America Merrill Lynch stated that Nvidia has unique growth opportunities and strong execution capabilities, Goldman Sachs holds a constructive attitude towards Nvidia’s data center prospects, and Barclays believes that key long-term issues have been resolved.

The financial report released by NVIDIA shows that its revenue for the second quarter of 2025 (the second quarter of 2024) increased by 1.2 times year-on-year to $30 billion, reaching the highest market expectation range ($29 billion to $30 billion). The revenue guidance for the third quarter (Q3) is $32.5 billion, which is in the middle of the expected range ($32 billion to $33 billion).

Although revenue continued to grow rapidly, the guidance did not meet Wall Street’s most optimistic expectations, and coupled with the delayed delivery of the so-called “strongest chip in history” Blackwell, Nvidia’s stock price fell 8% after the US stock market closed.

After the heavyweight financial report was released, Wall Street analysts summarized it one after another. To summarize with Morgan Stanley’s review: Nvidia’s performance in the second quarter was excellent, but it was far from enough. The market’s expectations for this top student were too high.

Wall Street believes that there are two major concerns in the market at present: when Blackwell will become the new engine for Nvidia’s performance growth, and whether the demand for AI chips can maintain high growth.

Regarding the first question, Nvidia stated during the conference call that with Blackwell starting mass production in the fourth quarter, it is expected to generate billions of dollars in revenue, but did not answer whether the billions of dollars in revenue are incremental.

Citigroup predicts that Nvidia’s stock price may remain volatile for the next two quarters before Blackwell reaches a turning point in annual sales and gross profit margin. As production costs for Hopper and Blackwell rise, most analysts expect Nvidia’s gross profit margin to continue to decline in the coming quarters.

For the second question, Huang Renxun remains optimistic about the future of AI applications, reiterating that global data centers are a trillion dollar opportunity. In Wall Street reviews, Citigroup, Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley, and others all expressed optimism about the future demand for AI chips.

Unlike the worried market, most Wall Street investment banks are optimistic about Nvidia’s growth prospects, with Citigroup, Bank of America Merrill Lynch, and Goldman Sachs all maintaining buy ratings for Nvidia. Bank of America Merrill Lynch stated that Nvidia has unique growth opportunities and strong execution capabilities, Goldman Sachs has a constructive attitude towards Nvidia’s data center prospects, and Barclays believes that key long-term issues have been resolved.

The following is a summary and commentary from Wall Street on Nvidia’s Q2 financial report and conference call:

Morgan Stanley

Morgan Stanley summarized Nvidia’s financial report and market reaction as the result of a bull market case, but a bear market price action.

According to Shawn Kim, an analyst at Dahmo, “Nvidia’s Q2 performance met expectations, there were no doubts about demand, and the forward guidance was positive.” Overall, its performance was good, but “good alone is not enough,” and “the market’s expectations for Nvidia are too high.

Despite exceeding market expectations in both revenue and guidance, Nvidia’s stock price has experienced a severe negative reaction. Da Mo believes that this negative may also mean that investors have become more cautious and expect a slowdown in the growth of the AI industry, especially after a long period of growth.

Bloomberg News

Bloomberg analyst Ian King summarized:

• Nvidia’s quarterly sales were roughly in line with analysts’ expectations, but disappointed the most optimistic investors.
• The most significant news is that Nvidia has admitted that there are some issues with the design of the upcoming Blackwell chip.
• Blackwell encountered issues during the production process and requires rework. However, this chip will still bring in billions of dollars in revenue in the fourth quarter.
• Analysts hoped to obtain more details about the launch of Blackwell’s product line, but Nvidia did not provide them, leading to a further significant drop in the company’s after hours stock price during the conference call.
• During the conference call, Huang Renxun remained optimistic about the future of AI applications and stated that the company has only just begun to promote the re equipping of global data centers with its equipment. This is a trillion dollar opportunity.
• After the conference call, Huang Renxun stated in an exclusive interview with Bloomberg TV that the supply will continue to improve every quarter, and next year’s supply will have a significant improvement compared to 2024. He said that overall, next year will be a great year.

Citigroup

Citigroup maintains a buy rating on Nvidia and a target price of $150, based on a 35 times earnings per share (EPS) ratio expected for 2025. Analyst Atif Malik of the institution wrote:

• Blackwell chip: The management has clearly stated that Blackwell is not expected to be launched in October, only samples. Regarding the mask defects that occurred during the production process of Blackwell, the management mentioned that due to the mask defects, they have delayed the delivery time by several weeks. However, they still expect to generate billions of dollars in revenue in the fourth quarter.
• Due to ongoing supply chain constraints, they expect strong demand for Hopper series chips from cloud service providers (CSPs) and enterprises.
• Non GAAP gross profit margin: The expected decline in gross profit margin for the third and fourth quarters is mainly due to the increased proportion of higher performance H200 chips and high bandwidth memory (HBM) combinations, which have pushed up GPU production costs.
• As for next year, the management expects the gross profit margin to continue to decline in the first quarter (Citigroup estimates over 200 basis points), with Blackwell being a key factor, and the gross profit margin in the second quarter will depend on the situation after Blackwell goes into mass production. Nvidia expects Blackwell’s production to meet their expectations.
• AI Network: NVIDIA sees the continued demand for Infiniband (“infinite bandwidth” technology) and plans to develop the next generation of Infiniband products. On the other hand, Nvidia is increasing its Ethernet products by offering many of the features they provide in Infiniband products. In terms of enterprise demand, the management believes there are several key driving factors: AI agents, Co Pilot, and robots.

Citigroup expects that Nvidia’s stock price may maintain range volatility in the next two quarters before Blackwell drives Nvidia’s annual sales and gross profit margin to a turning point. The Consumer Electronics Show (CES) held in January is Nvidia’s next major stock price catalyst.

In addition, as the demand for enterprise AI takes off, the adoption of AI is still in the third/fourth stage, and the demand for data computing will significantly increase by 10-20 times in the long run.

Bank of America Merrill Lynch

Bank of America Merrill Lynch reiterated its buy rating on Nvidia, raising its EPS forecast for fiscal years 2024/25 and 2025/26 by 9% to $2.81/3.90, and raising its target price from $150 to $165.

Analysts such as Vivek Arya from Bank of America Merrill Lynch stated that the fluctuation in Nvidia’s stock price is likely due to the possibility of Blackwell’s delivery being delayed by one quarter.

The agency also expects Nvidia’s gross profit margin to drop to 75% in the third quarter and further to 73% in the fourth quarter as Blackwell costs rise.

Although quarterly performance may fluctuate, Bank of America Merrill Lynch remains optimistic about Nvidia’s long-term growth prospects, stating that Nvidia has unique growth opportunities and strong execution capabilities, thanks to its leading position in the field of generative AI and over 80% market share.

• The promotion and application of generative AI technology is currently in its early stages (1-1.5 years), and the investment cycle is expected to last for 3 to 4 years.
• Importantly, the next generation of AI models will require 10-20 times more computing power to train (Blackwell’s computing power is only 3-4 times higher than Hooper’s).
• AI deployment remains a crucial task for global cloud/enterprise customers, and Nvidia offers the best one-stop model.

Bank of America Merrill Lynch believes that the main factors driving Nvidia’s stock price increase include:

• The demand for Hooper series products is strong, and despite being launched for two years, it is expected that demand will be higher in the second half of the year, with Blackwell contributing additional revenue.
• The demand of sovereign customers increased, and the order volume increased from high single digit US $billion to low double digit US $billion. The customer composition was diversified, with super large customers accounting for 45% and Internet service companies and corporate customers accounting for 50%.
• The demand for AI Ethernet products is strong, and it is expected to become a product line worth billions of dollars.
• The significant increase in pre orders, with a year-on-year growth of 149% to $27.8 billion in the second quarter, demonstrates the market’s confidence in Nvidia products.

Goldman Sachs

Goldman Sachs has maintained a buy rating on Nvidia and a target price of $135, with analysts Toshiya Hari and others pointing out:

• Although we expect the gross profit rate of Nvidia in the fourth fiscal quarter (the first quarter of natural year 2025) to be less than 70%, and the company’s growing operating expenditure budget will drive the market to re price the gross profit rate expectations in the future fiscal year, we still have a constructive attitude towards the revenue outlook of Nvidia’s data center, which covers cloud services, consumer Internet and enterprise customers, as well as training and reasoning workloads.
• On the positive side, regarding Blackweil, the management has confirmed that they have undergone a redesign without any compromise on performance, and it may bring in billions of dollars in revenue in the fourth quarter, not including Hooper’s revenue which is still growing.
• In our model, we have lowered our adjusted non GAAP gross profit margin forecast for the 2026/27 fiscal year by 200 basis points/210 basis points. However, due to the increase in data center revenue, we have moderately raised our adjusted non GAAP earnings per share forecast for the 2026/27 fiscal year by 3%/1%.

Barclays

Barclays maintains its overweight rating on Nvidia and a target price of $145, with analysts Tom O’Malley and others stating in a report:

• Although the guidance did not meet the most optimistic market expectations, we believe that key long-term issues have been resolved, paving the way for a strong start to the 2025 fiscal year.
• We understand that investors may nitpick this financial report from a superficial perspective, but the key issues are moving in a positive direction.
• Although the guidance did not exceed the consensus expectation of $2 billion as before, with lower gross profit margins and higher operating expenses, more importantly, Blackwell’s concerns about delays have been resolved, and it is expected that there will be billions of dollars in revenue in the fourth quarter, with Hooper continuing to grow by the end of the year.
• Overall, the revenue has clearly maintained continuity and stability, and the company has specifically mentioned that it expects to continue to grow significantly next year.
• The stock market’s response seems to be more related to changes in investment themes rather than the more conservative guidance we believe during product transitions. We will increase our holdings of (Nvidia) when the stock price falls.