Thursday Feb 22 2024 14:52
6 min
1. Nvidia blows by expectations in much-awaited earnings call, stock jumps
2. Nvidia earnings blow by estimates as chip giant brings in $22.1 billion in Q4 2023
3. Nvidia share price forecast: Wall Street upbeat on NVDA stock, sees further growth ahead
4. Loop Capital issues Street-high Nvidia price forecast of $1,200 prior to earnings call
Nvidia Corp. cleared a high bar with its latest earnings report on Wednesday, leading to a 9% surge in its stock in after-hours trading. The market’s positive response didn’t stop there, as Nvidia shares closed in on growth of 15% in premarket hours on Thursday.
The tech giant blew by revenue forecasts by nearly $2 billion for the recent quarter and did the same in its projections for the upcoming quarter. Investors have also been keenly observing Nvidia's long-term growth prospects — which the company’s management made a point to address.
During the earnings call, CEO Jensen Huang highlighted that while Nvidia does not provide long-term guidance, the outlook for continued growth in the coming two years and beyond remains strong.
Nvidia is capitalizing on the shift from general to accelerated computing, with a booming interest in generative artificial intelligence. Those areas have “hit the tipping point”, Huang said in the Nvidia earnings report.
“This new AI infrastructure will open up a whole new world of applications not possible today,” he added on the call. “We started the AI journey with the hyperscale cloud providers and consumer internet companies, and now every industry is on board — from automotive, to healthcare, to financial services, to industrial, to telecom, media and entertainment.”
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The chip giant’s fiscal fourth-quarter earnings showcased a dramatic increase in customer spending on AI hardware. Nvidia reported revenues of $22.1 billion, up from $6.05 billion the year before, while analysts had been modelling $20.4 billion.
Data-center revenue rocketed to a more than 400% increase from the previous year, reaching $18.4 billion — vs. the anticipated $17.06 billion.
Nvidia's revenue forecast for the current quarter was set at $24.0 billion — well above analysts’ expectations of $22.2 billion. The company also anticipates further sequential growth in data-center revenue.
Despite previous supply chain challenges, Nvidia CEO Jensen Huang noted improvements and predicted that market “demand will continue to be stronger” than the company’s supply throughout the year.
Nvidia's fiscal fourth-quarter net income stood at $12.3 billion, or $4.93 per share, a substantial increase from $1.4 billion, or 57 cents per share, in the same period last year. Adjusted earnings were $5.16 per share, exceeding the forecasted $4.59.
The company also reported a 56% increase in gaming revenue year-over-year, reaching $2.9 billion — against a forecast of $2.7 billion. Professional visualization revenue grew by 105% to $463 million, and automotive revenue slightly declined by 4% to $281 million, compared to the expected $422 million and $275 million, respectively.
Nvidia also highlighted that its software and services offerings have achieved a $1 billion annualized run rate in the fiscal fourth quarter, and remained upbeat about its future prospects in that area.
“This is going to likely be a very significant business over time,” Huang said, noting that Nvidia was “really just getting started.”
According to 33 analysts surveyed by TipRanks that offered 12-month Nvidia stock price targets, the consensus forecast for NVDA last stood at $810.15 — a potential 20% upside from its last closing price of $674.72 on February 21, 2024.
The highest listed Nvidia share price forecast on TipRanks was $1,200, while the lowest was listed at $575. Of the 33 analysts surveyed, 32 offered a Buy rating on NVDA stock, while only one analyst had it as a Hold. None rated it a Sell.
Prior to the Nvidia earnings call, HSBC analyst Frank Lee adjusted his price target on NVDA shares, increasing it to $835 from a previous forecast of $800. The investment bank maintained its Buy rating on the stock.
As cited by Markets.com Chief Market Analyst Neil Wilson in his week-ahead overview on February 19, Loop Capital provided Wall Street’s highest Nvidia stock price forecast. The firm has initiated a “Buy” rating and a $1,200 price target on NVDA:
"Initiating Buy and $1200 PT (63% appreciation) as we believe not only is there material upside to Street estimates in CY2024/FY2025 & CY2025/FY2026 but that we are at the front end of a 3 - 5-year GPU compute & Gen AI foundational build across Hyperscale.
While we acknowledge additional silicon providers (private as well as AMD & INTC) and Hyperscale specific internal silicon solutions will be coming online over the next few years, our work suggests NVDA's largest customers will be taking everything NVDA can give them in 2024 and 2025.
Our $1200 PT is 30x our $40.00 CY2025 EPS, NVDA's median P/E."
At the time of writing on Thursday, February 22, Nvidia shares were up 36.25% year-to-date. The company’s stock has almost tripled in value if viewed on a 12-month timespan, with the Nvidia share price having rallied by an eye-watering 185.13%.
In contrast, the benchmark S&P 500 index has shown gains of 4.44% (year-to-date) and 24.16% (1-year) respectively, while the Dow Jones Industrial Average is lagging behind with growth of 2.45% (YTD) and 16.5% (1-year).
The recent addition of Amazon shares to the DJIA, due to take effect next week, is expected to have a positive effect on the index’s growth. As per the index provider, the change is meant to reflect the “evolving nature of the American economy.”
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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
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