HSBC Adjusts Nvidia's Price Target Amid Supply Chain Concerns

HSBC Adjusts Nvidia's Price Target Amid Supply Chain Concerns

In a recent update, HSBC has revised its target price for Nvidia (NASDAQ: NVDA) from $195 down to $185. This decision is primarily driven by anticipated supply chain disruptions related to the GB200 chip for the first half of fiscal 2026. Despite this adjustment, HSBC has retained a 'buy' rating on Nvidia, showcasing continued confidence in the company's long-term prospects.

Challenges in Supply Chain Affecting Revenue

Investors are closely watching the ongoing supply chain challenges, especially those involving original design manufacturers who play a crucial role in assembling the components for Nvidia’s products. These issues are projected to impact revenue momentum in the early half of fiscal 2026, leading analysts to deem a 'beat & raise' scenario as improbable during this period.

Potential Offset Through New Product Launches

On a brighter note, the anticipated ramp-up of Nvidia's B200 AI GPU could help alleviate some of the negative effects stemming from the GB200’s supply constraints. Moreover, with the introduction of the B300/GB300 expected in the latter half of fiscal 2026, there may be delays in procurement that could affect the company’s near-term performance. Analysts are hopeful that these product launches will provide the necessary boost to Nvidia's growth trajectory.

Revenue Forecasts and Market Position

According to HSBC’s analysis, it seems improbable that Nvidia will be able to keep pace with a 'beat & raise' style of quarterly revenue forecasts, especially one projecting $2 billion. Specifically, meeting the more optimistic sell-side forecasts for the fourth quarter of fiscal 2025 and the second quarter of fiscal 2026, estimated at around USD42 billion and USD47 billion respectively, appears challenging until the latter half of fiscal 2026. This timeframe is anticipated to offer clearer visibility regarding the ramp-up in the GB200 supply chain.

Strong Demand in AI Sector

Nevertheless, the long-term outlook for AI demand remains robust. The current climate has seen tremendous investment from major players in the industry, underlined by Microsoft’s significant $80 billion commitment to data center expansion. Such investments are expected to underpin Nvidia’s fiscal 2026 revenue forecast of $94.6 billion from its data center segment, which aligns seamlessly with the growing demand.

Anticipated Recovery in Fiscal 2026

HSBC is optimistic about a marked improvement in Nvidia's performance during the second half of fiscal 2026. Even though the earnings per share (EPS) estimate has been trimmed by 6% to $5.74, this figure still sits 28% above the consensus estimates across the market. The adjusted target price continues to reflect a price-to-earnings (P/E) ratio of 32 times for fiscal 2026, remaining indicative of sustained investor interest in Nvidia's growth potential.

Frequently Asked Questions

What is Nvidia’s revised price target by HSBC?

Nvidia's price target has been revised by HSBC to $185 from a previous $195.

Why is the 'beat & raise' scenario considered unlikely?

Supply chain challenges, particularly with the GB200 chip, are expected to hinder revenue momentum in the first half of fiscal 2026.

How might Nvidia offset the GB200 shortfall?

The launch and ramp-up of Nvidia’s B200 AI GPU are anticipated to help balance the impact of the GB200 supply issues.

What long-term trends support Nvidia's market position?

Strong long-term AI demand and significant investments in data centers by major companies, including Microsoft, support Nvidia's market position.

How does HSBC view Nvidia’s EPS estimates?

HSBC has adjusted its EPS estimate to $5.74, which is still 28% above market consensus.

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