Analysts project strong future revenue growth driven by NVIDIA's Blackwell GPU architecture capabilities for AI workloads.

Nvidia Corp (NASDAQ:NVDA) is pursuing leadership in artificial intelligence chips through a new line of larger, more complex processors called Blackwell. These chips are nearly double the size of their predecessors, packing 2.6 times more transistors according to the Wall Street Journal. However, this ambitious leap has led to significant manufacturing challenges, with Nvidia taking a $908 million provision to account for production difficulties. A significant flaw can render a $40,000 Blackwell chip unusable, severely impacting manufacturing yields. During its recent earnings call, the company acknowledged these hurdles and announced design adjustments to improve production yields, including a change to the Blackwell mask to enhance yields.

Industry experts emphasize the complexity of scaling these advanced processors. G. Dan Hutcheson, vice chair of TechInsights, told the Wall Street Journal that the main challenge is getting these chips to function cohesively, as low yields in individual parts can lead to quick overall failure. Lisa Su, CEO of Advanced Micro Devices Inc (NASDAQ:AMD), noted that future complexity will rise as chipmakers stack more silicon layers for increased performance.

Nvidia reported $30 billion in second-quarter sales driven by data center sales. Management guided for $32.5 billion in revenues in the third quarter and expects Blackwell shipments to ramp up in the fourth quarter, with revenue worth several billion dollars for Blackwell targeted this year. Gross margins are expected to be in the mid-70s for fiscal 2025, with Hopper revenues likely to grow in the second half of fiscal 2025.

Wedbush analyst Matt Bryson reiterated an Outperform rating with a $138 price target. Bryson projects third-quarter revenue and EPS of $32.50 billion and 73 cents, and calculated his price target by applying a price-to-earnings multiple of approximately 36x to his fiscal 2026 EPS estimate of $3.78 plus net cash of $1.01 per share. Rosenblatt analyst Hans Mosesmann maintained a Buy rating with a $200 price target, noting that Nvidia reported a solid beat and raise on Hopper's generative AI and networking momentum. Mosesmann projects unconstrained fiscal 2027 EPS of $4.50 and applied a approximately 44x PE multiple for his price target assessment.