• UBS raises its price target for Nvidia to $205 from $175, anticipating a significant Q2 revenue beat.
  • Supply chain checks point to a 20-25% sequential jump in compute shipments, fueling a robust Q3 outlook of up to $57 billion.
  • The firm sees a potential path for Nvidia to re-engage the Chinese market with a tailored Blackwell chip if U.S. export restrictions ease.

UBS has significantly increased its price target for Nvidia Corp. to $205, up from $175, maintaining a Buy rating on the stock. The move is predicated on the firm’s analysis pointing to accelerating growth in Nvidia’s core data center business, driven by unrelenting demand for AI infrastructure.

The bank now anticipates Nvidia’s fiscal second-quarter revenue will come in around $46 billion, a figure that would surpass current consensus estimates by roughly $1 billion. The optimism extends into the third quarter, where UBS models revenue guidance of $54 billion to $55 billion, excluding any contribution from China. Should the company find a way to navigate U.S. export controls and resume more meaningful sales to Chinese clients, that figure could climb as high as $57 billion, according to the analysis.

This bullish outlook is supported by recent supply chain checks conducted by UBS, which suggest compute shipments are accelerating, projected to grow 20% to 25% quarter-over-quarter. This surge would translate to an additional $7 billion to $8 billion in related revenue. Despite well-documented shortages of 800G networking chips, networking revenue is also expected to see a healthy sequential increase of approximately $1 billion, reaching around $6 billion in the fiscal third quarter. In total, UBS expects data center revenue alone to approach a staggering $49 billion next quarter.

A key variable in Nvidia’s future growth trajectory remains the Chinese market. UBS analysts note that the company is currently working through some reusable inventory of its China-specific H20 product while also placing new orders for Hopper wafers. More notably, the firm posits that a China-compliant version of Nvidia’s next-generation Blackwell AI accelerator is a possibility. This, however, is contingent on a potential easing of U.S. export restrictions, which could be negotiated as part of a broader rare earths deal between the two superpowers. Nvidia did not immediately respond to a request for comment on the potential for a Blackwell China SKU.

The updated target from UBS arrives as Nvidia continues to post record-breaking financial results. In its most recent quarter, the chipmaker reported revenue of $44.1 billion, a testament to its dominant position in supplying the hardware underpinning the global AI boom. With its data center business continuing to fire on all cylinders and a potential catalyst on the horizon in China, analysts see few signs of the company’s growth narrative slowing down.