Nvidia Stock Soars 12% on Strong Earnings, Optimistic Forecast for A.I.
Nvidia Stock Soars 12% on Strong Earnings, Optimistic Forecast for A.I.
Nvidia shares surged over 12% on Thursday morning following the release of its strong financial report that exceeded expectations on both the top and bottom line. Analysts are also optimistic about the company's future in the field of artificial intelligence (AI).
For the fourth fiscal quarter, Nvidia posted revenue of $6.05 billion and an adjusted earnings per share (EPS) of 88 cents, surpassing the consensus estimate from Wall Street. The company also forecasted $6.5 billion in sales for the upcoming quarter, indicating its confidence in its continued success. With its strong financial performance and bullish outlook, Nvidia is well-positioned to continue its leadership in the competitive tech industry.
Nvidia's data center business was a particular area of growth that garnered positive reactions from analysts following the company's financial report. This division is responsible for most of Nvidia's sales of graphics processing units (GPUs) for artificial intelligence and saw a year-over-year increase of 11%.
As a result, many analysts have reasserted or upgraded their ratings on Nvidia's stock, with over a dozen increasing their target prices or maintaining a positive outlook on the company's future prospects.
During a call with analysts on Wednesday, CEO Jensen Huang emphasized the growing adoption of AI and cited OpenAI's ChatGPT as an example of its widespread appeal. Huang previously likened this transformation to the "iPhone moment" in a fireside chat at the University of California, Berkeley earlier this year, underscoring the significance of the AI revolution for the tech industry as a whole.
Nvidia's AI strategy is advancing rapidly and will have far-reaching implications for both its competitors and the broader world, according to Hans Mosesmann, an analyst at Rosenblatt Securities. In a note published on Wednesday, Mosesmann reiterated a buy rating and set a $320 price target for the company, adding that Intel's recent dividend cut marked a "multi-generational shift" with unprecedented consequences.
Similarly, Chris Caso at Credit Suisse praised Nvidia's growth potential in the semiconductor industry, calling it a stock that's "difficult not to own" and maintaining it as a top pick in the sector. Caso increased Nvidia's price target from $210 to $275 and cited "derisked gaming estimates" alongside strong AI/data center growth as driving factors.
Even Goldman Sachs' Toshiya Hari, who previously advised a wait-and-see approach, has upgraded Nvidia to a buy rating and raised the price target to $275. In a note on Thursday, Hari acknowledged that his earlier decision was mistaken and cited Nvidia's effective expense management and accelerating AI adoption as factors behind the upgrade.
