HSBC: Market still undervalues NVIDIA, growth guaranteed for FY 2026
HSBC believes that the market has underestimated the revenue growth brought by NVL server architecture and GB200 technology advantages
"NVIDIA, the king of chips", reported better-than-expected performance, with pre-market trading on Thursday surging nearly 7% in the US stock market.
HSBC pointed out in its latest analysis report that "the company's management is also optimistic about future demand expectations, and with the NVL server architecture and the technical advantages of GB200, growth in the 2026 fiscal year is also guaranteed."
In the first quarter, NVIDIA's revenue reached $26 billion, higher than the market's expected $24.7 billion, with a gross margin of 78.4%, exceeding the market's expected 77.0%.
What's even more surprising is that NVIDIA's management has conveyed strong growth expectations to the market. The company expects second-quarter revenue to reach $28 billion, higher than analysts' expectations of $27 billion, mainly due to strong demand for data center chips. However, the gross margin is expected to decrease to 75.5% in the second quarter.
Looking ahead, HSBC believes that the product transition risk in the second half of 2024 has decreased:
"With the expansion of TSMC's production capacity, the supply shortage of the heavyweight GPU products H100 and H200 is expected to improve. We expect that in the 2025 fiscal year, the revenue of the independent B100 and GB200 will be $15 billion and $4.5 billion respectively, or a total revenue related to Blackwell of $19.5 billion, accounting for 19% of the total data center revenue."
"HSBC believes that the market still underestimates the impact of the technical advantages of the NVL server architecture and the GB200 platform, which will be the most important driver of its FY26e data center growth:"
"Given the significant ASP premium of NVL36/72, it is expected that data center revenue in the 2026 fiscal year will reach $179 billion, 38% higher than the market's expected $130 billion. The forecasted total sales and earnings per share (EPS) for the 2026 fiscal year are $196 billion and $45.16, respectively, 36% and 38% higher than the market consensus forecast of $144.5 billion and $32.66."
In addition, HSBC maintains a target price of $1350 for NVIDIA, implying a 42% upside from its current stock price, with a target price-to-earnings ratio (PE) of 30 times