Stock futures rise as Nvidia results boost sentiment

Mizuho Financial Group has increased its price target for Nvidia Corporation's stock to $315 from $300, while retaining an "Outperform" rating. The company's stock is currently trading with a price-to-earnings ratio of 32.3x, although the analysts believe it is undervalued relative to its intrinsic value, making NVDA one of their most undervalued stocks.

The firm highlighted Nvidia's impressive July quarter revenue of $96.2 billion, as well as earnings per share of $2.22, and their guidance for the October quarter. They expect fiscal year 2028 revenue to reach approximately $700 billion, marking a more than 70% year-over-year increase and significantly exceeding the consensus estimate of $574 billion.

Data center revenue accounted for around $89 billion in the July quarter, marking an 18% sequential increase, with October quarter guidance pointing to a 12% sequential rise. Notably, the strong demand for Nvidia's Blackwell Ultra chips and the launch of Vera Rubin, which may account for about 20% of October quarter revenue, contributed to this upward trajectory.

Mizuho also noted that demand has surged by 100% year-over-year while supply remains limited, with CPU revenue rising more than 100% year-over-year, potentially exceeding $40 billion. The company's gross margins are expected to decline by 100 basis points sequentially to 74% in the October quarter, bottoming out at 71-72% and settling at 72-73% for fiscal year 2028.

The current gross profit margin stands at 74.15%, with revenue growing 71% year-over-year to $253.5 billion. The revised price target of $315 is based on a projected 20 times fiscal 2028 price-to-earnings ratio. Mizuho remains bullish on Nvidia's position as the leading AI-GPU provider. For additional insights, investors can refer to Mizuho's Pro Research Report on NVDA, one of 1,400+ US equities covered, along with 16 ProTips to guide investment decisions.

In other recent news, Nvidia reported outstanding fiscal second-quarter results, with revenue more than doubling to reach $96.2 billion, surpassing analysts' expectations. The adjusted earnings per share of $2.22 exceeded the forecasted $2.08, further solidifying Nvidia's strong position in the AI market. Data center revenue saw substantial growth, increasing by 117% year-over-year to $89 billion, with both Hyperscale and ACIE segments experiencing over 100% growth.

Nvidia's third-quarter guidance also surpassed expectations, boosting investor confidence. Other analysts have also responded positively to these developments, with KeyBanc maintaining an Overweight rating and a price target of $330, JPMorgan raising its price target to $320, and BofA Securities keeping a Buy rating while increasing its fiscal 2028 earnings per share estimate by 19% and projecting significant growth through 2030.