Nvidia (NASDAQ:NVDA)
Wall Street analysts praised Nvidia’s (NASDAQ:NVDA) resurgence in gaming and its promise in generative artificial intelligence, sending the company’s stock soaring more than 14% in early trade on Thursday.
Analyst Christopher Rolland from Susquehanna, who gave Nvidia (NVDA) a buy rating and set a $265 price target per share, said the company’s success in the gaming industry more than made up for any worries about its performance in the data center. He also predicted growth for Nvidia’s four business segments: gaming, professional visualization, automotive and embedded, and data center.
Nvidia has forecasted first-quarter revenues of $6.5 billion, give or take 2%. Company revenue is anticipated to be $6.35 billion.
Nvidia also said it anticipates $1.78B in adjusted operating expenditures and 66.5% in adjusted gross margins for the quarter, with a margin of error of 50%.
Although operational expenditures are expected to remain relatively stable over the next several quarters, Rolland emphasized that the company’s gross margins remained strong.
Rolland said in a letter to clients, “In sum, this news was better than expected, maybe signaling the worst for NVIDIA’s business is over.”
Companions to Nvidia, such as AMD and Marvell Technology (MRVL), rose by over 4% and 3%, respectively, on the news.
After the results, Nvidia was raised to buy by Goldman Sachs analyst Toshiya Hari, who cited the company’s success in gaining wallet share in the data center and the gaming industry as reasons for the upgrade.
In a letter to clients, Hari predicted that the stock would continue to perform well because “looking forward,… we think the combination of favorable estimate revisions and a likely expansion in the company’s multiple – consistent with prior recovery stages” would fuel the stock’s rise.
KeyBanc Capital Markets analyst John Vinh highlighted opportunities in generative AI, which has an outperformed rating and per-share price target of $280. Vinh specifically mentioned ChatGPT, commonly assumed to leverage Nvidia’s GPUs to train its massive language models.
Specifically, “the [year-over-year] growth for the data center is likely to increase during [fiscal 2024], led by Hopper ramps and Generative AI demand,” as Vinh said in a letter to customers.
Due to the guidance, Vinh adjusted his forecasts and said that stockholders should maintain their position “for the secular growth potential in ML/AI and new product cycles.”
While Morgan Stanley analyst Joseph Moore is worried about the short-term downturn in the data center, he sees GPUs as an area of “relative strength” in the cloud, where he has set his price objective for Nvidia shares at $255.
With the recent spike in the stock price, Moore said, “we had been waiting for a downturn to make a more timely call.” But, with the release of worse figures, “we would acknowledge aren’t confident that dip is going to materialize; we would keep a market weight position in the company and would continue to search for opportunity.”
Microsoft revealed its partnership with Nvidia on Tuesday to provide Xbox PC games via Nvidia’s GeForce Now streaming service.
Featured Image: Pexels @ Pixabay
