As the world increasingly embraces artificial intelligence (AI), demand for this technology continues to grow, undeterred by macroeconomic headwinds. AI solution providers are poised to capitalize on this boom—and within the AI ​​space, Nvidia is NVDAa leading provider of AI hardware and software solutions, is my top pick, especially as Nvidia prepares to report its second-quarter earnings on Wednesday, August 28.

As companies across industries invest billions in AI infrastructure, Nvidia’s graphics processing units (GPUs) play a central role in this development. As a result, investor sentiment toward Nvidia has soared, sending the stock up nearly 20% in just two weeks. The optimism reflects investor confidence that Nvidia will continue to deliver solid revenue and profits due to its dominant position in AI chips.

Investors are not the only ones who are excited about Nvidia’s potential. Analysts are also actively supporting Nvidia shares ahead of the release of the quarterly figures and expect the company to exceed market expectations.

While upcoming results will provide more insight into the robustness of AI demand, increased spending on AI will solidify Nvidia’s position in the sector and could potentially propel the stock to new highs.

Q2 results: A crucial catalyst

Nvidia’s financial performance has been nothing short of stellar, driven by rising demand for its advanced AI chips. With the second quarter approaching, the company is poised to report another impressive quarter, driven by a continued rise in adoption of its AI products.

The company’s management expects total revenue for the quarter to be approximately $28 billion, suggesting that Nvidia’s revenue will more than double compared to the same quarter last year. This optimistic forecast is supported by expected sequential growth across all market segments, particularly in the Data Center business, which has seen notable expansion.

In the first quarter, Nvidia’s data center revenue grew an astonishing 427% year over year, driven by strong demand for the NVIDIA Hopper GPU computing platform. During the first quarter earnings call, Nvidia leadership highlighted growing interest in the Hopper platform for the second quarter, with demand expected to exceed supply.

The Hopper platform is very attractive and is attracting interest from large cloud service providers (CSPs), which are expected to generate a significant portion of data center revenue in the second quarter. Moreover, the growth of this segment is not limited to CSPs alone. It is worth noting that the application of generative AI has expanded to consumer internet companies, enterprises, automotive companies, and sovereign AI. This has created several emerging end markets worth billions for Nvidia.

Nvidia also began sampling the H200 in the first quarter, with production and shipments planned for the second quarter. The H200, which significantly improves the inference performance of its predecessor, the H100, is expected to drive demand in the coming quarters.

Given Nvidia’s dominance in the AI ​​sector and continued demand for its GPUs, the company is on track for significant revenue growth. This growth, coupled with margin expansion, will significantly boost earnings per share (EPS). Analysts are forecasting second-quarter earnings per share of $0.59, up 136% year over year. With solid business momentum and expanding margins, Nvidia is well positioned to beat earnings expectations again.

Nvidia shares could reach new highs

Given the impressive revenue and earnings forecasts, Nvidia stock is poised for a potential upswing. If the company beats analysts’ high expectations and delivers solid guidance, it could push Nvidia’s stock price to a new 52-week high. This optimism is supported by Nvidia’s continued leadership in AI, expansion into emerging markets, new product launches, and ongoing innovation.

For long-term investors, Nvidia is undoubtedly an attractive investment opportunity. The company’s extensive portfolio of end-to-end solutions – including advanced computing and networking technologies as well as full-stack software – combined with its AI expertise and extensive partner network is a strong investment argument. Nvidia’s ability to offer comprehensive solutions in the AI ​​field makes the company a top player in the industry.

Analysts are very optimistic about Nvidia shares ahead of the release of the quarterly results. The stock has a consensus rating of “Strong Buy”, with 34 of 39 analysts giving NVDA the highest rating.

This consensus rating reflects a positive attitude toward Nvidia and speaks to confidence that the company can deliver solid financial results in the second quarter, which could well drive the share price to new highs.

Wall Street’s average price target for NVDA shares is $141.65, suggesting potential upside of about 13.6% ahead of the Q2 earnings release.

On the date of publication, Amit Singh did not have any positions (directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see Barchart’s disclosure policy here.