HSBC cautious on Nvidia ahead of Q2

Nvidia faces mixed signals as HSBC flags China risk despite a bullish AI demand backdrop.

HSBC Cautious on Nvidia Ahead of Q2 Results

Nvidia will report results on August 27, and most Wall Street analysts remain bullish on the stock because of booming AI demand, stronger cloud spending, and relief from U.S. export rules. But HSBC analyst Frank Lee is staying on the sidelines. He lifted his price target to 200 dollars from 125 but kept a Hold rating, arguing that China risks remain a headwind even after the resumption of H20 licensing.

Lee warned that the market may be underestimating how much China could weigh on future growth. The restart of H20 licensing has improved sentiment, but lower prices tied to U.S. revenue sharing rules and Beijing policy push to reduce dependence on American chips could limit upside. He expects Q2 revenue to come in around 46.7 billion dollars, just above management guidance of 45 billion and near consensus of 46.3 billion. For Q3, he sees revenues around 53.9 billion, roughly in line with the consensus of 53.3 billion. He adds that the AI chip market is larger than previously thought thanks to more cloud spending and demand from enterprise and government buyers, but he does not expect big upward revisions while China uncertainty lingers.

The cautious stance from HSBC highlights a key tension in the market. Investors are chasing a powerful AI growth story while the policy landscape grows more complex. In the near term, Nvidia may show strength, yet the longer horizon is shaped by policy and geopolitics.

The broader trend is clear: the industry is expanding, but gains may hinge on how quickly governments align on export controls and supply chains. Nvidia benefits from cloud and enterprise demand, yet China policy remains the major wild card. If the policy environment stays unsettled, the stock could see choppier days even as core fundamentals stay intact.

Highlights

The earnings season will test how much risk is priced into Nvidia stock.