Nvidia Stock Slips 1% Ahead of Earnings as AI Server Prices Rise 15%

Key Takeaways

• Nvidia stock closed 0.98% lower at $214.72 as investors positioned cautiously before the fiscal second-quarter earnings report.
• Wall Street anticipates revenue of approximately $92.16 billion and adjusted EPS of $2.09, nearly doubling year on year.
• Reported AI server price increases above 15% have raised concerns regarding memory costs, gross margins, and customer spending plans.

Stock Performance Overview

Nvidia's stock experienced a decline ahead of one of the most anticipated earnings reports of the quarter. Shares finished at $214.72, down 0.98%, marking a pullback of roughly 9% from its May record above $236. Despite this, Nvidia remains up approximately 15% in 2026, indicating a cautious sentiment among traders as the earnings release approaches.

Earnings Forecast

Nvidia is set to release its fiscal second-quarter 2027 results after the US market closes on August 26. Analysts expect record quarterly revenue of around $92.16 billion, representing a 97% increase from the previous year. Adjusted earnings are forecasted at $2.09 per share, nearly double the previous year's $1.05. The data center revenue is projected to reach approximately $85.67 billion, up 108% year on year, highlighting Nvidia's reliance on spending from hyperscale cloud companies.

Market Sentiment and Expectations

Options markets indicate an expected move of about 6% in either direction following the earnings report. Investors are particularly focused on Nvidia's guidance for the October quarter, including demand for new systems and the availability of advanced memory components. A simple headline beat may not suffice to drive sustained share-price increases; the market will likely scrutinize Nvidia's outlook closely.

Price Increases and Cost Structure

Recent reports suggest that Nvidia's largest customers are facing price increases of over 15% for servers containing its AI chips. This could impact systems shipped from early 2027 and may affect Nvidia's gross margins. The rising costs of memory, which now constitute a significant portion of AI server expenses, could challenge Nvidia's pricing power unless offset by price increases to customers.

Analyst Predictions

Citi has maintained a Buy rating for Nvidia with a price target of $300, forecasting stronger results than the broader market expects. The bank anticipates revenue of approximately $93 billion for the July quarter and $105 billion for the October quarter, driven by the expansion of Nvidia's systems and increased shipments of optical transceivers.

Potential Market Reactions

A positive market reaction would likely require Nvidia to exceed consensus estimates significantly. Key factors influencing the stock's movement post-report will include updates on production, shipments, and the company's ability to manage rising memory costs without dampening demand. Conversely, a cautious outlook or slower growth could lead to a negative response, even with record results.