Nvidia (NASDAQ: NVDA) heads into its Wednesday, May 20 earnings report with shares under pressure, closing at $225.32 on May 15, down 4.4% from the previous close. The decline was not isolated to Nvidia; the broader semiconductor sector pulled back, with Micron falling 6.62%, Intel down 6.18%, AMD off 5.69%, Broadcom lower by 3.32%, and Marvell dropping 3.12%. This retreat came after an extraordinary rally: since March 30, Intel surged 164%, Micron 125%, AMD 116%, Marvell 101%, and Nvidia itself gained 36%, making profit-taking almost inevitable.
Despite the pre-earnings dip, Wall Street remains overwhelmingly bullish. Bank of America raised its price target to $320 from $300, calling Nvidia its “top sector pick” and projecting the AI data-center market could reach $1.7 trillion by 2030. Wells Fargo lifted its target to $315 from $265, while TD Cowen’s Joshua Buchalter raised his to $275 from $235, citing a $1 trillion-plus order pipeline for Nvidia’s Blackwell and Rubin chips. BofA’s Vivek Arya based his target on a 28x price-to-earnings multiple on 2027 estimates, well within Nvidia’s historical forward P/E range of 25 to 56.
However, risks persist. UBS warned that 8 of the 12 largest global semiconductor companies are “extremely crowded long” positions, and flagged that as hyperscalers shift to asset-heavy models, cash flow returns on investment could decline. Nvidia’s own CFROI is expected to hit 82% this year, yet historically only 0.09% of global stocks sustain returns above 50% for five years. Deutsche Bank’s Ross Seymore cautioned that Nvidia’s expected growth over the next two years already “appears to be reflected in the stock’s price,” making a genuine upside surprise harder to deliver. CEO Jensen Huang has acknowledged the no-win sentiment, saying, “If we delivered a bad quarter, it is evidence there’s an AI bubble. If we delivered a great quarter, we are fueling the AI bubble.”
All eyes are on the Q1 FY2027 report for evidence that Blackwell demand remains strong and that margins can stay healthy. Nvidia’s last quarterly results showed record revenue of $68.1 billion with a non-GAAP gross margin of 75.2%. The company has also projected the revenue opportunity for its AI chips could reach at least $1 trillion through 2027. With the stock still up more than 1,800% since October 2022, the earnings update will be a critical test of whether the AI boom can keep delivering beats against lofty expectations.
