- Nvidia soared 26% and added $199 billion in market value after its blockbuster first-quarter earnings report.
- The company pointed to a surge in adoption of artificial intelligence for driving its big guidance raise.
Nvidia stock soared 26% on Thursday, adding about $199 billion to its market value and making it a near-$1 trillion company after its first-quarter earnings and second-quarter guidance blew away analyst expectations.
Thanks to the growing generative artificial intelligence market, Nvidia increased its second-quarter revenue forecast to $11 billion — more than 50% ahead of Wall Street's $7 billion estimate. The company's AI chipsets help drive the technology behind OpenAI's ChatGPT and Alphabet's Bard chatbots.
Analysts cheered Nvidia's report, with Wedbush analyst Dan Ives calling it "jaw dropping guidance heard around the world."
Here's how Wall Street reacted to Nvidia's earnings report and bullish guidance.
Goldman Sachs: 'The inflection in Generative AI development is here.'
Rating: Buy, $440 price target, raised from $275.
Goldman highlighted that Nvidia's revenue guidance implies a near doubling in its data center business sequentially.
"While the natural reaction is to question the sustainability of this strength in Data Center, we believe the proliferation of Generative AI across various verticals coupled with a fully committed (and currently under-utilized) supply chain will support sequential growth in the October and January quarters," Goldman Sachs analyst Toshiya Hari said.
And while competition will be on the rise for Nvidia, Hari isn't yet concerned, citing its competitive moat and the urgency of customers developing increasingly complex AI.
JPMorgan: 'First massive wave of demand in Generative AI... more to follow.'
Rating: Overweight, $500 price target, raised from $250.
Nvidia is a "one-stop solution provider," and its data center business should grow sales more than 80% in the July quarter versus the record April quarter, JPMorgan analyst Harlan Sur said.
"While we were anticipating accelerated demand in its data center business, we were surprised by the significant revenue step-up in the July quarter (and this does NOT include their inferencing chipset solutions, like the H100 NVL, which they will start shipping in volumes in 2H of the year). Moreover given the strong demand for its data center products, the team has extended visibility for the next several quarters and has secured more supply to support continued revenue growth in the 2H of the year," Sur said.
CFRA: 'Generative AI and investments in LLMs are driving robust demand.'
Rating: Buy, $415 price target, raised from $350.
"Generative AI and investments in large language models (LLMs) are driving robust demand, with cloud providers increasingly adopting NVDA's next-gen H100. We believe NVDA's DGX on premise/cloud offerings are seeing strong traction while its Grace CPU is now sampling with customers. Ensuring supply from Taiwan Semi will be critical to sustain demand. While gaming was down 38%, lapping tough comps/peak demand, sales rose sequentially (+22%) for the second consecutive quarter and recovering nicely from a major downturn in CY 22," CFRA analyst Angelo Zino said.
Wedbush: The 'AI revolution has begun.'
Rating: Neutral, $290 price target.
"There is not one better indicator around underlying AI demand going on in the hyperscale/cloud and overall enterprise market than the foundational Nvidia story... The Street was all awaiting last night's Nvidia quarter and guidance to gauge the magnitude of this AI demand story with many skeptics saying an AI bubble was forming and instead Jensen & Co. delivered guidance for the ages," Ives said.
"In 22 years of covering tech stocks and large cap we have NEVER seen a guidance range of this magnitude on a large cap tech name and thus speaks to our thesis that the monetization of AI... is well underway."