Increasing confidence in the chip designer’s revenue exceeding Wall Street estimates boosts the stock by approximately 19% from its two-month low
On Tuesday, Nvidia shares reached a historic peak amid heightened anticipation for the chip designer’s quarterly results, benefiting significantly from the surge in artificial intelligence.
Increased confidence in Nvidia’s ability to surpass Wall Street’s revenue expectations has driven the stock up by approximately 19% from its two-month low reached last week.
The shares rose by 0.4% to $471.55, reaching a new peak of $481.87 shortly after the market opened. This surpassed the previous high of $480.88 recorded on July 14. Analysts anticipate that Nvidia, a key player in the market for chips driving generative AI applications such as ChatGPT, will project a remarkable 110% growth in third-quarter revenue, reaching $12.50 billion, in its upcoming Wednesday report.
“This earnings report could be the most crucial of the season. We’re eager to hear that they can continue the momentum from the exceptional quarter they experienced last time,” stated Dennis Dick, a market structure analyst at Triple D Trading.
In May, the company projected second-quarter revenue that exceeded expectations by over 50%, propelling its market capitalization beyond $1 trillion and establishing its stock as the leading performer on the S&P 500 index.
Nvidia’s impressive forecast in the previous quarter also triggered a surge in AI stocks and major tech companies, playing a pivotal role in driving the US stock market rally this year.
“To maintain the current stock price, we would like to witness the bottom line align with the gains in shares,” commented Brian Mulberry, client portfolio manager at Zacks Investment Management, a holder of Nvidia shares.
In the current month alone, at least 19 brokerages have raised their target price for Nvidia, elevating the median projection to $500, representing a 6.5% increase from the stock’s most recent closing price. Nvidia shares have surged by over threefold in value year-to-date.
In the second quarter, Nvidia experienced the most significant surge in popularity among hedge funds, as indicated by a report from Goldman Sachs on Monday.
“The Nvidia [and] AI narrative is currently steering the market. If Nvidia were to fall short of expectations, the market would face substantial challenges,” commented Dick.