SoftBank Exits NVIDIA—So What? Analysts Still See More Upside

Key Points

• SoftBank exited its stake in NVIDIA, but didn't alter the market dynamic.
• The company is leading the AI wave and will likely outperform Q3 estimates.
• Price pullbacks are buying opportunities; the upside potential is still triple-digit.

NVIDIA NASDAQ: NVDA made headlines again with a major backer exiting its stake. However, as newsworthy as it is, it is ultimately a so-what moment for the stock’s price. Not only were the sales made in the prior month, but the impact on market dynamics is minuscule and offset by numerous factors. Softbank’s remaining position was worth approximately 0.12% of the market cap and 0.13% of the stock float, about one-fifth of the average daily volume, which is insufficient to offset the monumental influx of investor dollars represented by analysts and institutional trends. 

Institutional trends remain strong, with the group holding around 65% of the stock, a significant portion considering retail interest. Over the past 12 months, they've been purchasing at roughly $3 for every $1 sold, with activity increasing throughout the year. The pace slowed in October, ahead of the upcoming earnings release, but remains bullish on balance and likely to remain so following the report. Data from Bank of America reveals that NVIDIA remains among the most-owned stocks by fund managers, with more than 75% holding it, and ownership continues to expand, with depth solid. 

Analysts' trends are equally robust, including increased coverage, firming sentiment, and a rising consensus price forecast. The coverage is up approximately 10% in the last 12 months to 48, making NVIDIA among the most-covered stocks on Wall Street, and the sentiment firmed to Buy from Moderate Buy. The price target—the critical detail for investors—assumes a 22% upside as of mid-November, just ahead of the Q3 earnings release, and is up 60% in 12 months and 10% in the preceding 30 days, with the trend pointing to $350. A move to $350 would represent an 80% gain, in addition to the 120% increase posted since April. 

NVIDIA Market Reaches Turning Point, Again

NVIDIA’s Q3 earnings release will be a market-moving event. As it stands, the consensus in early November is for year-over-year growth to accelerate compared to the prior quarters. Reasons to believe it's possible include the fact that the Blackwell line is in full production and demand continues to swell, as evidenced by the pipeline of AI deals announced over the past 60 days. The question is whether NVIDIA will outperform the consensus estimate as it has for the past few years. If so, the sequential acceleration will be significant, potentially topping 500 basis points, and guidance is also a factor. 

NVIDIA’s guidance has been a driving force for market sentiment since the AI bubble began to inflate. The company tends to outperform consensus estimates and provide hot guidance, which is expected this quarter as well. The risk is that analysts have priced in the strength, leaving the company vulnerable to a tepid performance relative to the consensus. In this scenario, NVIDIA’s stock price will likely correct, potentially significantly, before resuming the trend and setting new highs. 

Valuation is a concern in 2025, with the stock trading nearly 45 times its earnings growth, and growth is expected to slow in the upcoming quarters. However, the forecasts are robust, so even with tepid performance, there is value for investors. The consensus estimate values this stock at approximately 10 times its 2035 outlook, suggesting it can still double at least. Doubling would align it with the S&P 500 average, which is still a low valuation for blue-chip tech. Those stocks tend to trade in the 30 to 35 times earnings range, suggesting NVIDIA’s stock price could advance as much as 250% within the next few years. 

NVIDIA Market Waits for Earnings: Looks Ready to Pop

NVIDIA’s stock price action in the first two weeks of November was mixed. However, the market is consolidating ahead of the upcoming release at record highs and is poised to advance rapidly, provided a catalyst emerges. The critical resistance level is near $210 and will likely be tested ahead of the report.