To The Moon

NVIDIA Drops 2.3% Before Earnings — I’m Still Bullish 🚀

NVIDIA just gave investors a better entry point.

Shares fell 2.3% Tuesday, as the entire semiconductor complex sold off, with NVDA now sitting around the $225 area ahead of its Aug. 26 earnings. The market is suddenly questioning whether AI spending has gone too far, whether NVIDIA is financing its own demand, and whether challengers like Cerebras and Groq can finally take share.

My take?

The market is focusing on the wrong risk. I’m bullish into earnings.

1. The fundamental numbers are still extremely hard to ignore

NVIDIA’s last quarter was not a company showing signs of slowing down.

Q1 FY27 revenue hit $81.6B, +85% YoY, while Data Center revenue reached $75.2B, +92% YoY.

Even more important: NVIDIA guided Q2 revenue to approximately $91B ±2%, while maintaining roughly 75% non-GAAP gross margins. (NVIDIA Investor Relations)

That means the upcoming earnings report isn’t about whether NVIDIA is growing.

It’s about whether NVIDIA can beat an already enormous number AND raise the bar again.

And that’s where I think the upside remains underestimated.

2. BofA’s $350 target isn’t as crazy as it sounds

Bank of America recently reiterated a Buy rating with a roughly $350 price target, implying more than 50% upside from around $225.

The interesting part isn’t simply the target.

BofA argues that NVIDIA’s strategic investments are helping secure something increasingly scarce:

power + land + data-center capacity + customers.

That distinction matters.

The AI bottleneck is increasingly moving away from simply “who has the best chip?”

It’s becoming:

Who can actually deploy enough compute?

NVIDIA is trying to control more of that entire stack.

(MarketWatch)

3. The $105B OpenAI guarantee looks scary — but I don’t think it’s the bear thesis

This is probably the biggest headline risk right now.

NVIDIA agreed to provide up to $105B of guarantees connected to OpenAI’s Ohio data-center lease, while also investing $1.5B into SB Energy.

Naturally, investors are asking:

Is NVIDIA financing its own customers so those customers can buy NVIDIA chips?

That’s a legitimate question.

But there’s an important distinction.

The $105B is not simply NVIDIA handing OpenAI $105B in cash.

The guarantees relate to lease/power obligations and the infrastructure financing structure. The exposure is also subject to conditions and caps rather than being an unconditional cheque for the entire project. (Reuters)

So yes — I would monitor this closely.

But calling the entire arrangement “circular financing” and therefore declaring NVIDIA’s revenue fake is, in my opinion, too simplistic.

NVIDIA is effectively saying:

“If AI demand is going to explode, we want to make sure the infrastructure exists to consume our GPUs.”

That’s aggressive.

But aggressive doesn’t automatically mean irrational.

4. The competition narrative is being exaggerated

Cerebras just unveiled its CS-4 and is claiming it is the fastest AI accelerator available.

Groq meanwhile just raised another $350M, bringing its recent funding to $1B, with NVIDIA itself expected to participate. (Investor’s Business Daily)

At first glance:

NVIDIA → threatened by specialized AI chips.

But I see something different.

AI inference is becoming increasingly diversified, and specialized accelerators will absolutely take some workloads.

But NVIDIA’s advantage isn’t simply the GPU.

It’s the full-stack ecosystem:

GPU + networking + CUDA/software + systems + rack-scale architecture + developer ecosystem + hyperscaler relationships.

A Cerebras chip being faster at a particular workload doesn’t automatically mean hyperscalers rip out their NVIDIA infrastructure.

The real battle is total cost, software compatibility, flexibility, performance and deployment scale.

And NVIDIA still has an enormous lead across that stack.

5. The most bullish signal: AI infrastructure spending isn’t slowing

This is the part I’d pay the most attention to.

The recent semiconductor weakness has created the impression that AI capex is collapsing.

But recent cloud-company results suggest something closer to the opposite:

Demand isn’t necessarily the problem. Infrastructure deployment is.

The industry is fighting over electricity, land, networking, cooling and data-center capacity.

That’s exactly the environment where NVIDIA’s strategy becomes more valuable.

The company isn’t merely selling chips into AI factories.

It is increasingly positioning itself around the entire AI infrastructure buildout.

(Business Insider)

6. So why did NVDA fall?

I don’t think Tuesday’s -2.3% move should be interpreted as an NVIDIA-specific fundamental deterioration.

The broader semiconductor complex was hit hard, with the SOX down around 4% as Treasury yields and geopolitical concerns pressured high-growth technology stocks. NVIDIA simply got dragged lower with the sector. (Reuters)

That’s actually what makes the setup interesting.

NVDA is approaching earnings after a sector-wide shakeout rather than after an enormous pre-earnings melt-up.

That gives the stock room to re-rate if NVIDIA delivers.

7. What I want to see on Aug. 26

Revenue beating ~$91B is obviously important.

But I’d be watching four things much more closely:

① Blackwell/Rubin demand

Is demand still exceeding supply?

If management says customers are still fighting for capacity, the AI infrastructure thesis remains intact.

② Gross margins

Around 75% is the key benchmark.

If NVIDIA can maintain exceptional margins while scaling Blackwell, that’s extremely bullish.

③ Forward guidance

This is the biggest one.

A $94B quarter would be impressive.

A $94B quarter followed by a $100B+ outlook would completely change the conversation.

④ Customer capex

If Microsoft, Amazon, Google, Meta and other hyperscalers continue aggressively expanding AI infrastructure, NVIDIA’s revenue runway remains enormous.

8. Buy before earnings or wait?

My preference:

I would start a position before earnings rather than wait entirely for the report.

But I would NOT go all-in.

At roughly $225:

$220–225 → attractive starter zone

$210–220 → strong buy zone

Below $210 → aggressive accumulation zone

$236+ → breakout territory / less attractive risk-reward before earnings

The important technical level is around $236.54, which has been identified as a major breakout/buy point. (Investor’s Business Daily)

If NVDA breaks that level on strong volume before earnings, momentum could accelerate quickly.

9. What could send NVDA toward $300–350?

The bull case doesn’t require NVIDIA to become more expensive purely through multiple expansion.

It requires earnings to keep catching up.

If NVIDIA can continue producing:

$90B → $100B → $110B+ quarterly revenue

while maintaining ~70%+ gross margins, the current valuation becomes much easier to justify.

That’s why I wouldn’t call NVIDIA a “bubble” simply because the stock has already created enormous wealth.

A bubble is when price rises much faster than the underlying economics.

NVIDIA’s problem is that the economics are also growing at an extraordinary rate.

Q1 revenue was up 85%.

Data Center was up 92%.

And NVIDIA is already guiding to another $91B quarter. (NVIDIA Investor Relations)

The stock is expensive.

But expensive ≠ bubble.

🔥 My conclusion

I’m bullish on NVIDIA into Aug. 26.

The $105B OpenAI guarantee deserves scrutiny.

Cerebras deserves attention.

Groq deserves attention.

And yes, expectations are extremely high.

But none of those currently outweigh the biggest fact:

AI infrastructure demand is still expanding faster than the industry can build the infrastructure required to satisfy it.

And NVIDIA remains at the center of that bottleneck.

So personally:

I would rather accumulate NVDA around $220–225 before earnings than chase it above $235 after the market suddenly decides AI is “back.”

My base case:

Beat + strong guidance → $240–260

Bull case:

Major upside guide + continued Blackwell demand → $280–300+

Extreme bull case:

The market starts pricing BofA’s $350 thesis → $300–350

Bear case:

Guidance disappoints / margins compress / hyperscaler capex concerns → $200–210

But at ~$225, I think the risk/reward is increasingly skewed bullish, especially if you’re willing to hold beyond one earnings reaction.

**The AI trade isn’t dead.

The market is simply demanding proof that NVIDIA can keep turning AI demand into numbers.

I think it will. 🚀**

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