HSBC Global Research maintained Nvidia Corp (NASDAQ:NVDA) with a Buy rating Monday and lifted its 12-month price target as the firm believes the chipmaker's strong pricing power will allow the company to continue to deliver upside surprises through fiscal-year 2026.
What To Know: In a new note to clients, HSBC analyst Frank Lee emphasized that Nvidia has robust pricing power in its NVL36/NVL72 server rack system and GB200 platform. The analyst maintained an optimistic outlook on the stock with a Buy rating and elevated target price of $1,350, up from $1,050.
Lee pointed out that he previously anticipated strong momentum from Nvidia this year driven by the company's AI roadmap for 2025. He now believes his prior estimates were too low.
"We are even more bullish that Nvidia now has the potential to see FY26 revenue of USD196bn based on its NVL36/NVL72 server rack ASP of USD1.8m/USD3m and total server rack unit assumption of 35,000," the HSBC analyst said in the note.
Lee highlighted potential uncertainties surrounding the transition of Nvidia's GPU products in the latter half of the year and noted that although he expects the chipmaker to beat estimates when it reports earnings later this month, he sees "limited room for significant earnings upside" over the next two quarters.
Nvidia is expected to report earnings of $5.55 per share and revenue of $24.485 billion on May 22, according to estimates from Benzinga Pro. Lee expects Nvidia's first-quarter revenue to surpass both consensus forecasts and management guidance, forecasting revenue of about $26 billion in the first quarter and potential revenue of $28 billion in the second quarter.
Takeaway: While HSBC does not foresee significant upside surprises in Nvidia's upcoming earnings reports, the Buy rating reflects the firm's confidence in Nvidia's long-term growth prospects. The raised target price with approximately 50% upside from current levels signals HSBC's belief in Nvidia's ability to capitalize on its product transitions and sustain its momentum into the future. Lee believes there is "significant upside" to fiscal-year 2026 earnings that is still not fully priced in.
NVDA Price Action: Nvidia shares were up 0.45% at $902.75 Monday afternoon, according to Benzinga Pro.
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