Nvidia ( NVDA ) has once again confirmed its status as Wall Street’s market darling. After a rousing AI-fueled earnings call and a look that shook up analysts’ already refined financial models.
Shares of the chip company exploded 27% in pre-market trading on Thursday. The company’s ticker page was the most active on the Yahoo Finance platform, closely followed by rival chip players such as AMD ( AMD ) and Intel ( INTC ).
If Nvidia’s pre-market gains hold, the company’s market value will soar to more than $200 billion, marking the largest one-day gain in history. Apple’s $191 billion pop in November 2022 is the current record holder.
It was Nvidia’s vision that really surprised investors.
The company expects second-quarter revenue of about $11 billion, plus or minus 2%. Wall Street expects $7.2 billion.
Nvidia founder and CEO Jensen Huang’s most upbeat outlook to analysts on a conference call reflects a fundamental shift toward accelerated computing. In turn, Nvidia’s chips will make AI in high demand.
“We’re seeing incredible orders for repurposing the world’s data centers. So I think you’re seeing the beginning of a 10-year transition to repurposing or repurposing the world’s data centers and making it into accelerated computing,” Huang said. “You get a pretty dramatic shift in data center spend from traditional computing and with SmartNICs, smart switches, and of course GPUs and workloads that can accelerate the creation of AI.”
Here’s the vibe on Wall Street after Nvidia’s big quarter and outlook.
Reuben Roy, Stifel (hold rating; $370 price target, up from $300): “Nvidia’s recent momentum continued as first-quarter results beat consensus expectations and the company’s second-quarter earnings outlook topped high expectations. Nvidia is in the AI-infrastructure wallet share’s sweet spot as the build-out of accelerated computing networks continues. According to company data. The core numbers will grow, on the near-term supply environment.” Questions are likely to continue. While not providing clear long-term guidance, Nvidia management noted that data center-related demand visibility has increased and the company has significantly oversupplied. In the second half of the year, we raised our estimates and target price, making CSP capex spending trends a near-term beneficiary of better positioning. We continue to look at Nvidia.”
Tristan Zerra, Bird (outperform rating, upgrade from hold; $475 price target, up from $300): “We raised our estimates above consensus and added a new pick designation on Nvidia on March 20, reflecting our channel view of strong H100 orders related to ChatGPT coming out in March, but we failed to upgrade at that time. AI-related order momentum continues. In the second half, $10 annualized revenue will be achieved within 2-3 quarters in our view, reflected in post-estimated earnings. Our elevated next two-year EPS forecast assumes continued AI-related momentum driven by two secular growth trends: continued adoption of parallel processing-based acceleration in data centers and the emergence of AI models, particularly ChatGPT. and associated with LLMs [large language models]All of these require GPUs.”
Atif Malik, Citi (Rate Buy; $420 price target, up from $353): “While we raised our target price and estimates on earnings, the generative AI uptick exceeded our expectations. Nvidia expects data center sales to roughly double in the July quarter driven by demand for generative AI from CSPs, consumer Internet companies and accelerated computing. Nvidia has generated $1 trillion in data over the past four years. Center estimates that only ~4% of the CPU installed base is GPU accelerated, indicating that AI adoption is in its early innings.”
Dan Ives, Wedbush (no rating/price target): “There is no better indicator of underlying AI demand in the hyperscale/cloud and overall enterprise market than the underlying Nvidia story. We see Nvidia as the central hearts and lungs of the AI revolution based on its core chips train and deploy AI that can be developed. Apps like ChatGPT. The Street was all about Nvidia last night. After waiting for the quarter and many skeptics for guidance to gauge the size of this AI demand story, Jensen & Co. instead said an AI bubble was forming.
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