In anticipation of Nvidia's upcoming earnings release on August 28, Goldman Sachs has reaffirmed its Buy rating on the company, citing expectations of robust revenue growth in the data center segment and strong demand for artificial intelligence (AI). The investment bank's bullish scenario even suggests that Nvidia's stock could potentially rise by 89% if data center revenue doubles by fiscal-year 2025.

Despite concerns surrounding the timing of the Blackwell GPU launch, Goldman Sachs maintains confidence in Nvidia's long-term growth prospects. The investment bank believes that the company's data center segment will play a crucial role in driving earnings outperformance in the current quarter. Despite any temporary setbacks due to the Blackwell delay, Goldman Sachs foresees significant sequential revenue growth in this segment, fueled by continued demand for Hopper-based GPUs, such as H100, H200, and H20.

Goldman Sachs also expects Nvidia's Networking business, particularly the ramp-up of its Ethernet-based Spectrum-X product, to contribute significantly to revenue growth. The outlook for AI demand has improved, as indicated by recent reports of a 28% sequential increase in High-Performance Computing revenue by Taiwan Semiconductor Manufacturing Company (TSM), and Advanced Micro Devices Inc.'s (AMD) revised full-year Data Center GPU revenue outlook, now raised to $4.5 billion.

Considering Nvidia's current price-to-earnings (P/E) ratio of 42x next twelve months (NTM) consensus EPS, which is 1% below its past three-year median, Goldman Sachs believes there is a favorable risk/reward balance. The investment bank's updated Bull/Bear framework suggests that Nvidia's stock has the potential for 89% upside under the most bullish scenario and 61% downside under the most bearish scenario.

Looking further ahead, Goldman Sachs remains optimistic about Nvidia's prospects in fiscal-year 2025. The investment firm expects continued double-digit revenue and earnings growth driven by ongoing investments in AI infrastructure by major U.S. hyperscalers and enterprises. Despite debates surrounding the monetization of AI and potential impacts on customer capital expenditures, Goldman Sachs believes Nvidia is well-positioned to defend its market leadership.

Goldman Sachs maintains its 12-month price baseline target for Nvidia at $135, based on a multiple of 50x its normalized EPS estimate of $2.70. With confidence in Nvidia's growth trajectory, the investment bank recognizes the potential for the company to deliver strong performance in the coming years.

As investors eagerly await Nvidia's earnings release, the outlook remains positive, backed by strong data center revenue growth and robust demand for AI.