The AI chipmaker's stock hit a new record after its earnings beat investors' sky-high expectations
Wall Street’s buzzing with talk of the hottest tech stock that just keeps getting hotter: Nvidia $NVDA. The AI chipmaker beat investors’ sky-high expectations when it reported record fourth-quarter revenues of $22 billion — 270% more than the year before.
Before Nvidia reported earnings, analysts were wary that the AI wave the tech giant’s been riding would come crashing down as its customers (Microsoft $MSFT, Meta $META, Google $GOOGL, and Amazon $AMZN) start to develop their own AI chips and rivals up their game. That wariness pushed down its share price, and the stock had its worst day in months on Tuesday.
But Nvidia is back and better than ever. The tech giant’s stock — which has been on a huge rally over the last year — soared 16% Thursday to a new high of $785.
Still, some analysts are skeptical about whether the Nvidia glory days will continue — or if we’ll see a big bust like we did in the dot-com era. Analysts at Bernstein, Rosenblatt, and KeyBanc raised their price targets for the stock to $1,000 or higher, while others bumped up their guidance more modestly.
“Nvidia delivered against what was seemingly a very high bar,” said Goldman analysts in a note Thursday, raising their price target for the stock to $875. Goldman foresees “not only sustained growth in Gen AI infrastructure spending” by big tech companies, but also “increased development and adoption of AI across enterprise customers representing various industry verticals [like autos] and, increasingly, sovereign states.”
Analysts anticipate Nvidia shares to average $850 in 2024, up $200 from their prior target. That’s because they expect that demand will continue to outstrip supply, noting that they’re “encouraged by strength in the automotive and enterprise segments as well, although strong adoption of autonomous driving in the market remains to be seen.”
But Nvidia thinks self-driving vehicles are the future and is betting on their success.
Wells Fargo $WFC analyst Aaron Rakers sees shares rising to $840 due to “increasing confidence that NVDA’s datacenter momentum and software monetization” can drive continued growth. Rakers said Nvidia is one of the “most attractive secular growth stories” in the semiconductor industry.
“The company is printing money at this point,” said analysts in a note seen by Investing.com. “And the prospect for continued growth from here still seems solid.” They see the stock rising to $1,000.
BofA’s price target also neared $1,000 but fell a little short at $925. “Our positive view on Nvidia is based on its underappreciated transformation from a traditional PC graphics chip vendor, into a supplier into high-end gaming, enterprise graphics, cloud, accelerated computing, and automotive markets. The company has executed consistently and has a solid balance sheet with demonstrated commitment to capital returns.”
The bank said Nvidia’s strong earnings report gave its analysts “higher conviction in our thesis that NVDA will become the dominant ecosystem as the compute industry sees a Tectonic Shift to a Parallel Processing Computing Era [aka AI].” They gave a more modest price target of $780.
“It’s clear that over the next year, Nvidia will continue to dominate the AI compute space as their customers race to scale the necessary infrastructure and their competitors play catch up,” said analyst Gil Luria. “Having said that, we still believe a decline in demand may be inevitable over the next 4-6 quarters...”
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