Wall Street Analysts React to Nvidia’s Impressive Earnings as Stock Reaches Intraday High

Here’s what Wall Street is saying about Nvidia’s earnings.

Stifel analyst Ruben Roy noted the company’s results were ahead even of the high end of so-called whisper numbers—the unofficial estimates that circulate on Wall Street ahead of an earnings announcement and are often more optimistic than consensus forecasts.

“We underestimated the opportunity related to the potential shift of $1 trillion of installed data-center infrastructure from general-purpose compute to accelerated compute architectures,” Roy wrote in a research note.

Roy raised his rating on Nvidia to Buy from Hold and target price to $600 from $440.

Nvidia also addressed several concerns about whether its progress is sustainable. The company said it expects product supply to increase in the next fiscal year, alleviating worries that it won’t be able to meet rising demand for AI chips.

“With visibility extending into ’24, [Nvidia] management has qualified additional suppliers…and expects to increase supply each quarter through next year to meet demand,” KeyBanc analyst John Vinh wrote in a research note. 

Vinh raised his target price on Nvidia to $670 from $620 and kept an Overweight rating on the stock. The new target is based on a forecast price-to-earnings multiple of 35 times for 2025.

Revenue from China was within the company’s historical range of between 20% and 25%, indicating the beat wasn’t driven by Chinese orders being pulled forward over fears of future U.S. restrictions. 

UBS analysts noted that Nvidia indicated it could reallocate Chinese shipments of its A800 and H800 chips—which have intentionally limited capacity to meet U.S. export restrictions—if required. They kept a Buy rating on the stock and raised their target price to $560 from $540.

Nvidia executives told analysts on an earnings call that additional export restrictions of data center graphics-processing units (GPUs) to China wouldn’t have an immediate material impact on its financial results but would result in a long-term loss of an opportunity for the U.S.

“Nvidia remains the purest scale play on AI adoption,” Oppenheimer’s Rick Schafer wrote in a research note, as he raised his target price on Nvidia to $650 from $500 and kept an Outperform rating on the stock. 

Competition doesn’t look like an immediate concern. Nvidia executives emphasized the move toward GPUs to power AI tools and away from general-purpose processors. Nvidia is estimated to have around a 90% market share for AI-related GPUs currently.

“Strong competition is important for a healthy innovation ecosystem. The market should want to see another player and should want to see this next digital transformation boom be more pervasive and persistent versus a bubble of irrational exuberance,” said Daniel Newman, CEO of technology research firm Futurum Group. 

Newman said Nvidia’s report showed there should be opportunities for companies such as

Advanced Micro Devices

(AMD) and

Intel

(INTC) to provide rival AI chip offerings. However, he noted the window for alternatives to grow could be narrowing as Nvidia increases the attractiveness of its own platform via software development and industry partnerships. 

Write to Adam Clark at [email protected]