In anticipation of Nvidia's second-quarter earnings report on August 28th, the sentiment towards the company's stock on Wall Street has been growing increasingly bullish. Toshiya Hari, an analyst at Goldman Sachs, recently reaffirmed a buy rating on the artificial intelligence (AI) leader, maintaining a price target of $135 per share.

Despite the initial optimistic target, subsequent gains have slightly tempered the expected upside potential for Nvidia's stock. Nonetheless, Goldman's latest note on the company not only emphasizes Nvidia's strong competitive position in AI and accelerated computing applications but also hints at the possibility of a positive valuation revision following the earnings report.

During the first-quarter report released in May, Nvidia provided guidance for approximately $28 billion in sales and a gross margin of 74.8% for the second quarter. The company also anticipated non-GAAP (adjusted) operating expenses of $2.8 billion for the period.

Over the past year, Nvidia has consistently exceeded both its own targets and Wall Street's expectations, leading to heightened anticipation for its upcoming report. HSBC, for instance, anticipates the tech giant to report revenue of $30 billion, while the average analyst estimate calls for $28.6 billion in sales.

Reports on capital spending and guidance from key customers like Microsoft suggest that Nvidia is well-positioned to surpass the average analyst estimates once again. However, the potential for valuation volatility in the near term cannot be discounted. To trigger another significant rally, Nvidia may need to post revenue and earnings significantly higher than Wall Street's targets.

Despite the high expectations, Nvidia remains a favorable investment option ahead of its earnings report. However, investors might consider implementing a dollar-cost-averaging strategy to mitigate any potential risks associated with short-term volatility.

It is essential to note that though Nvidia did not make The Motley Fool Stock Advisor's list of the 10 best stocks to buy now, the company's historical performance remains strong. Using their recommended stocks from April 15, 2005, an investment of $1,000 would have grown to an impressive $787,394*. The Stock Advisor service, trusted by investors for its success, provides guidance on building portfolios, regular analyst updates, and two new stock picks every month.

As Nvidia prepares to unveil its second-quarter results, investors eagerly await the financial performance of this influential AI frontrunner. With the market anticipating impressive figures from the tech giant, all eyes will be on Nvidia as it aims to maintain its track record of surpassing expectations.

Disclaimer: The Ascent, a Motley Fool company, is an advertising partner of HSBC Holdings. Keith Noonan has no position in any of the mentioned stocks. The Motley Fool has positions in and recommends Nvidia and Goldman Sachs Group. The Motley Fool also recommends HSBC Holdings.