Editor's Note: With 40 analysts setting an average price target 25% above current levels and institutional buying accelerating ahead of next week's report, one critical revenue figure could determine whether Nvidia reclaims its $3 trillion market cap – or faces another brutal selloff. What insiders know about the China opportunity could change everything.
The artificial intelligence chipmaker that captivated Wall Street for two years is approaching its most crucial earnings test yet. Nvidia will report its fiscal 2026 first-quarter results on May 28, and the stakes couldn't be higher for a stock that has become synonymous with the AI revolution but has struggled to maintain momentum in 2025.
Analysts are expecting Nvidia to deliver approximately $43 billion in revenue for the first quarter, representing a staggering 65% growth compared to the year-ago period. This forecast aligns with the company's own guidance, but recent developments suggest the actual numbers could surprise even the most optimistic projections.
According to a Reuters report, Chinese technology giants including ByteDance, Alibaba, and Tencent placed orders for at least $16 billion worth of Nvidia's H20 AI GPUs in the first three months of 2025. This surge in Chinese demand is particularly significant, considering that Nvidia's revenue from China in the previous fiscal year reportedly stood at just over $17 billion.
The timing of these massive orders, combined with the recent U.S.-China trade agreement that temporarily reduced tariffs, could provide the perfect catalyst for an earnings beat that sends the stock soaring.
Perhaps the most compelling argument for Nvidia isn't just its growth prospects, but how much cheaper the stock has become. Based on the company's fiscal 2025 EPS of $2.99, the stock trades at a price-to-earnings ratio of nearly 40 as of this writing, which represents a steep discount to its 10-year average of 59.7.
With the stock trading at 38.7 times trailing earnings and 25.7 times forward earnings, analysts project about 51% earnings growth. This forward-looking valuation puts Nvidia in an attractive position compared to many other technology giants, especially considering its dominant market position in AI chips.
The recent 22% decline from January highs has created what many analysts view as a rare second chance for investors who missed the initial AI surge.
The relationship between U.S. and Chinese technology companies has been one of the biggest wildcards for Nvidia, but recent developments suggest this headwind may be turning into a tailwind. U.S. Treasury Secretary Scott Bessent announced a dramatic reduction in trade tensions between the U.S. and China, with U.S. tariffs on Chinese goods dropping from 145% to 30% and Chinese duties on U.S. imports dropping from 125% to 10% during a 90-day pause period.
President Donald Trump is referring to this event as a "total reset" in U.S.-China relations, which may signal a more favorable international environment in the coming months. For Nvidia, this could mean not only continued access to Chinese customers but potentially expanded opportunities as AI adoption accelerates globally.
The company's ability to serve both domestic and international markets positions it uniquely to benefit from any easing of trade tensions.
The analyst community's confidence in Nvidia remains remarkably strong despite the stock's recent volatility. Based on 40 Wall Street analysts offering 12-month price targets for Nvidia in the last 3 months, the average price target is $164.51 with a high forecast of $200.00 and a low forecast of $100.00.
The average price target represents a 24.82% change from the last price of $131.80, suggesting that even after the recent recovery, analysts see significant upside potential. More importantly, NVDA beat its EPS estimate 100.00% of the time in the past 12 months, indicating a strong track record of exceeding expectations.
This consistent ability to outperform estimates, combined with the current attractive valuation, creates a compelling setup for the May 28 earnings announcement.
Beyond the immediate quarterly results, Nvidia's long-term prospects remain tied to the massive expansion in AI infrastructure spending. Meta Platforms, Amazon, Microsoft, and Alphabet are four of Nvidia's top customers who entered 2025 expecting to spend approximately $320 billion combined on AI data center infrastructure and chips.
Crucially, none of these major customers slashed their capital expenditure plans in their recent quarterly reports, with Meta Platforms actually revising its forecast capex range upward to between $64 billion and $72 billion. This sustained commitment to AI infrastructure investment provides a strong foundation for Nvidia's continued growth.
The convergence of attractive valuation, massive Chinese orders, easing trade tensions, and sustained AI infrastructure spending creates a potentially explosive setup for May 28. Investors who act before the earnings announcement could position themselves for significant gains if Nvidia delivers the kind of beat-and-raise quarter that has become its signature move.
The current price levels offer what could be the last opportunity to enter before the stock potentially reclaims its position as Wall Street's AI darling. With analysts unanimously bullish and the technical setup improving, the risk-reward profile appears increasingly favorable for those willing to make their move before the earnings catalyst.
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