Nvidia (ticker: NVDA) experienced a significant boost in shares on Thursday as analysts celebrated the company’s impressive quarterly earnings and positive outlook. The results not only surpassed expectations but also provided reassurance about the sustainability of Nvidia’s progress. Additionally, concerns regarding supply constraints and the influence of Chinese customers on the company’s demand were alleviated.
In premarket trading on Thursday, Nvidia stock soared by 8% to reach $508.87. This surge was attributed to the company’s strong financial performance and upbeat projections, which exceeded analysts’ estimates. Moreover, Nvidia addressed concerns by assuring that product supply would increase in the upcoming fiscal year, thus demonstrating its commitment to meeting the rising demand for AI chips.
KeyBanc analyst John Vinh expressed his confidence in Nvidia’s growth potential, noting that the company has qualified additional suppliers and expects to consistently increase supply each quarter throughout the next year. In light of this information, Vinh raised his target price on Nvidia shares to $670 from $620 and maintained an Overweight rating on the stock. His revised target price is based on a forecasted price-to-earnings multiple of 35 times for the year 2025.
Furthermore, Nvidia’s revenue from China remained within its historical range of 20% to 25%, indicating that the company’s strong performance was not solely driven by Chinese orders pulled forward due to concerns about future U.S. restrictions. This underscores the widespread demand for Nvidia’s graphics-processing units, signifying a major shift in data centers towards leveraging these units to power AI tools instead of relying on general-purpose processors.
In conclusion, Nvidia’s remarkable growth fueled by the artificial-intelligence boom has garnered positive attention from analysts. With its robust financial performance, commitment to addressing supply constraints, and a broadening customer base, Nvidia is poised for continued success in the AI market.
Nvidia’s AI Story Drives Stock Growth
By Adam Clark
In a recent research note, Rick Schafer from Oppenheimer expressed optimism about NVIDIA’s future in artificial intelligence (AI) and raised his target price on the stock to $650 from $500. He highlighted that NVIDIA remains a top choice for investors seeking exposure to the growing AI market due to its position as a scale play.
Following NVIDIA’s encouraging report, other companies in the hardware and software sectors also experienced gains as investors bet on the potential of AI. Chip maker Advanced Micro Devices (AMD) saw a 3.3% increase in premarket trading, while Microsoft and Alphabet (Google’s parent company) rose by 2.2% and 1.4% respectively.
According to Daniel Newman, CEO of technology research firm Futurum Group, healthy competition is vital for driving innovation in the AI ecosystem. He emphasized the importance of having multiple players in the market to avoid a speculative bubble. Newman also noted that there are opportunities for companies like AMD and Intel to develop rival AI chip offerings. However, he cautioned that Nvidia’s growing attractiveness through software development and industry partnerships may limit the window for alternative solutions.
In premarket trading, Intel saw a modest increase of 0.4%.
