12:07 PM EDT, 08/21/2025 (MT Newswires) -- Nvidia ( NVDA ) is poised for revenue growth, particularly from its data center compute and networking segments, as it navigates challenges in China, UBS Securities said Thursday in a note that previewed the company's fiscal Q2 results.

UBS analysts said they project the chipmaker's fiscal Q2 revenue at around $46 billion, with fiscal Q3 guided to between $54 billion and $55 billion excluding revenue from China, or up to $57 billion if including China.

The company's fiscal Q3 compute revenue growth may rise 20% to 25% from a base of approximately $35 billion in the previous quarter, adding roughly $7 billion to $8 billion more for fiscal Q3, the analysts said. Further, there is some uncertainty in the networking segment, but revenue of around $6 billion is expected, they said.

For the China market, some H20 GPU inventory that the company previously wrote down may be recovered, the note said. According to the analysts, Nvidia ( NVDA ) placed new Hopper wafer orders on the H20 license news, even as the company still works on a Blackwell version in anticipation of looser export restrictions due to rare earth materials negotiation between the US and China.

The 15% license fee imposed by US tariffs on H20 GPUs is expected to reduce gross margin by about 50 to 60 basis points, but Nvidia ( NVDA ) will likely consider it an acceptable trade-off, the analysts said. Meanwhile, overall demand is "as strong as ever", with the company's rack partners indicating sales of about 30,000 racks this year with strong Q4 ramp-up, they said.

Nvidia ( NVDA ) will release its fiscal Q2 results next Wednesday.

UBS reiterated the company's stock rating at buy and raised the price target to $205 from $175.

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