Nvidia Shares Surge 10% to Record $1,051.96 on Strong AI Chip Demand Forecast

Nvidia shares surge 10% to record $1,051.96 on $26.04B revenue, 427% data center growth, and strong AI chip demand.

By Bill Bullington

5/23, 12:22 EDT
Advanced Micro Devices, Inc.
Micron Technology, Inc.
NVIDIA Corporation

Key Takeaway

  • Nvidia shares surged over 10% to a record high of $1,051.96 after reporting Q1 revenue of $26.04 billion, surpassing estimates.
  • The company provided strong guidance for the current quarter with expected revenues of $28 billion and announced a 10-for-1 stock split.
  • Analysts raised price targets significantly, citing robust demand for AI chips and Nvidia's new Blackwell chip platform.

Nvidia's Strong Earnings

Nvidia shares surged over 10% on Thursday following the company's announcement of better-than-expected earnings and robust demand for its artificial intelligence (AI) chips. The company's first-quarter revenue reached $26.04 billion, surpassing the LSEG estimate of $24.65 billion. Nvidia's data center revenue saw a significant increase of 427% during the quarter. The company also provided strong guidance for the current quarter, expecting revenues of $28 billion, which is higher than the LSEG estimate of $26.61 billion. Nvidia's shares hit an all-time high of $1,051.96 during intra-day trading, marking a 111% increase for the year. The company also announced a 10-for-1 stock split, with shares set to begin trading on a split-adjusted basis on June 10.

"This is the beginning of a new industrial revolution," said Jensen Huang, Nvidia's CEO, emphasizing the transformative impact of AI. The company's net income for the quarter was $14.88 billion, or $5.98 per share, a significant increase from $2.04 billion, or 82 cents per share, in the same period last year. Analysts had predicted sales of about $24.7 billion and earnings of $5.65 per share. Nvidia's market valuation has now surpassed $2.3 trillion.

Analyst Reactions

Wall Street analysts have become increasingly bullish on Nvidia following its strong earnings report. Bernstein's Stacy Rasgon raised the firm's price target to $1,300, stating that the narrative surrounding Nvidia is "clearly nowhere near its end, or likely nowhere near its peak." Jefferies also increased its target to $1,350, citing a strong ramp for Nvidia's new Blackwell chip platform and expectations for an acceleration in "magnitude of beats" later this year. Citi's Atif Malik adjusted his price target to $1,260, while JPMorgan's Harlan Sur revised his target to $1,150 from $850, noting that demand for Nvidia's products continues to outstrip supply.

"A strong beat and raise directly in line with our checks further emphasizes the strong desire for AI investments across the broader ecosystem," wrote Barclays analyst Tom O’Malley, who lifted the firm's price target to $1,200 per share. Morgan Stanley's Joseph Moore also raised his price target to $1,160 from $1,000, highlighting the strong demand for Nvidia's Blackwell chips, which he expects to be sold out through 2025.

Market Impact

Nvidia's strong performance has had a ripple effect on the broader chip sector. The VanEck Semiconductor ETF (SMH) traded 3% higher in the premarket, and shares of companies like Micron Technology and Advanced Micro Devices (AMD) also saw gains. Nvidia's AI accelerators, which are crucial for developing chatbots and other advanced tools, have become highly sought after, contributing to the company's soaring sales. Nvidia's data center division, now its largest source of revenue, generated $22.6 billion last quarter, while gaming chips provided $2.6 billion.

Huang emphasized that Nvidia aims to expand its market beyond the giant cloud-computing providers known as hyperscalers. The company is targeting consumer internet companies, carmakers, biotechnology, and healthcare customers. "We are poised for our next wave of growth," Huang said, noting that the new Blackwell chips are now in full production and will contribute significantly to the company's 2024 revenue.

Street Views

  • Stacy Rasgon, Bernstein (Bullish on Nvidia):

    "The narrative surrounding the company is clearly nowhere near its end, or likely nowhere near its peak."

  • Jefferies Analyst for Nvidia (Bullish on Nvidia):

    "We raised our target on the stock to $1,350 due to a strong ramp for Blackwell and anticipation of an acceleration in magnitude of beats later this year when the platform launches."