Nvidia: Nvidia result beats estimates, lifts AI and global tech shares

NEW YORK:Shares of AI bellwether Nvidia rose 4.3% to hit a record high on Thursday, lifting tech shares around the world, after the company forecast quarterly revenue that smashed expectations and announced a $25 billion buyback plan.
The results, reported late on Wednesday, signaled that Wall Street’s artificial intelligence rally still has legs.
Shares of Nvidia rose to $491.2, surpassing an all-time high they hit earlier this week, and added about $50 billion to the valuation of the company that became the first trillion-dollar chip firm earlier this year.
Nvidia’s market capitalization was $1.21 trillion at 09:41 a.m. ET. “Bears will be arguing that at some point, the valuation will start to appear full. Luckily for Nvidia, a cursory glance would suggest there aren’t many bears around,” said Hargreaves Lansdown analyst Sophie Lund-Yates.
More than 20 brokerages raised their target price on Nvidia after the earnings, according to Refinitiv data, with Elazar Advisors being the most bullish at $1,600, representing a three-fold increase in the stock’s value from current levels.
Rosenblatt Securities’ target of $1,100 is the other one above $1,000, according to Refinitiv data.
Median analyst price target on the stock nearly doubled to $600 since May when the company’s forecast for a 50% jump in second-quarter revenue sent its shares soaring.
Nvidia has been the biggest beneficiary of the rise of ChatGPT and other generative AI apps, virtually all of which are powered by its graphics processors.
Investors with short position on Nvidia lost $826 million in mark-to-market losses on Thursday, data from analytics firm S3 Partners showed.
The stock trades at about 39 times the consensus earnings for the next 12 months, cheaper than its forward price-to-earnings ratio of 80 in May, Refinitiv data showed.
Bernstein analysts expect Nvidia stock to become cheaper than it was before it reported results due to “the magnitude of earnings revisions.”
Wall Street rally
Nvidia’s results are also keeping a Wall Street rally alive, with the tech-heavy Nasdaq Composite up about 0.5%, and the S&P 500 up 0.2%.
“Nvidia news has a boosting effect on technology stocks, if only by confirming that all the talk around the AI-craze was not empty, after all,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Shares of AI-related chip stocks including Nvidia rival Micron Technology up 1.3%, while Broadcom added 3.3%.
US-listed shares of Taiwan Semiconductor Manufacturing Co (TSMC) , which supplies to Nvidia, rose 1.0%.
Shares of Asian chip companies rallied after tech darling Nvidia’s results.
A lot rested on Nvidia posting strong results, as most of the S&P 500’s over 15% year-to-date gains have come from the AI-driven rally in Nvidia and other Big Tech stocks.
Investing.com analyst Thomas Monteiro said Nvidia’s results validated “the narrative that has been propping tech stocks in general this year.”

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