When you've got a half-trillion-dollar order backlog, that's usually great news. But what happens when everyone already knows about it and has priced it in? That's the curious situation Nvidia Corporation (NVDA) finds itself in ahead of its highly anticipated third-quarter earnings report.
Big Numbers, High Expectations
Stifel analyst Ruben Roy just raised his price target on Nvidia from $212 to $250, maintaining a Buy rating. But here's the twist: he's also warning that the near-term upside may already be baked into the stock price.
The backdrop is impressive. During a recent keynote, Nvidia CEO Jensen Huang highlighted the company's $500 billion cumulative order book for its Blackwell and Rubin chip architectures. That's the kind of number that should make investors do a double-take.
"With consensus (and our) expectations incorporating Mr. Huang's commentary, expectations remain elevated," Roy noted in his investor update.
The Baseline Just Got Higher
Here's where things get interesting. Roy pointed out that Huang's transparency about the backlog has actually reset what counts as "good news." A backlog of $350 billion could now be the "baseline expectation," making it harder for Nvidia to deliver upside surprises.
The analyst said the commentary has pushed estimates higher, extending into early 2028. When you've already told the market about your massive pipeline, beating expectations becomes trickier.
Still The Best Positioned Player
Despite the valuation concerns, Roy remains bullish on Nvidia's fundamental position. Industry data points suggest AI compute demand remains robust, and he expects the company to beat third-quarter estimates while providing optimistic fourth-quarter guidance.
"We expect the near-term investor debate to remain centered on the sustainability of infrastructure investment, despite another round of hyperscaler capex increases/commentary on continued investment," Roy said.
The analyst sees Nvidia as "best positioned to benefit" from AI infrastructure spending and believes the company is well situated in markets that combine for a total addressable market exceeding $100 billion as 2025 ends, with a longer-term opportunity approaching $1 trillion.
Roy did flag supply-side factors as a potential risk for the third quarter, though he didn't elaborate on specifics.
Price Action
Nvidia stock traded down 2.4% to $182.08 on Tuesday, operating within its 52-week range of $86.62 to $212.19. Shares remain up 31.5% year-to-date in 2025.