Shares of Nvidia rose in early trading on Monday, following a month of relatively muted gains, after a top Wall Street analyst issued a bullish price target for the world's third-largest tech giant.
Nvidia (NVDA) The company's stock has added nearly $2 trillion in market value this year, but its earnings have largely stagnated since the semiconductor giant's 10-for-1 stock split in early June. The split came after its fiscal first-quarter earnings report, which was stronger than expected.
However, the broader outlook for the stock has remained largely intact and some analysts have argued that Apple (APL-American Lead Association) June 10 reveals its artificial intelligence ambitions and Tesla's continued rise (TSLA) The stocks have been gaining momentum over the past month.
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Nvidia, with a market value of $3.1 trillion, ranks below Microsoft (MSFT) and Apple (with $3.48 trillion and $3.47 trillion respectively) as the third largest company in the world.
However, UBS analyst Timothy Arcuri notes that while investor sentiment on Nvidia stock “has faded a bit in recent weeks, creating more of a 'wall of worry,'” he sees the pause as “ultimately healthy” for the stock if his and his team's new earnings outlook materializes.
Acuri, who raised his price target on Nvidia by $30 to $150 a share, sees earnings next year coming in around $5 a share, with revenue topping $200 billion. That’s thanks to strong sales of its new line of artificial intelligence-based Blackwell systems and increased spending by hyperscalers such as Microsoft and Google. (GOOGL) Meta Platforms (GOAL) and amazon (amazon.com) .
Big ai investors benefit from Nvidia
In fact, hyperscalers are set to spend around $92 billion this year alone to build out their massive computing infrastructure. The investment reflects their clients’ decision to leverage their massive data sets to improve sales of everything from drive-thru restaurants to the most complex pharmaceutical tests.
That's helping Nvidia, which earlier this spring launched the Blackwell line of computing processors, which will likely replace the company's reference H100 chips and drive consistent revenue gains.
The new Blackwell GPU architecture, named after African-American mathematician David Harold Blackwell, performs ai tasks more than twice as fast as Nvidia's current Hopper chips while using less power and providing more customizable flexibility, the technology group said.
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“Our recent supply chain checks confirm our prior suspicions that demand momentum for Blackwell rack-scale systems remains extremely strong,” Arcuri wrote. “While our estimates have consistently been well ahead of (Wall Street), we are still accumulating a gap with what the supply chain suggests.”
Arcuri also raised his 2025 revenue forecast by about 12%, to $204 billion, with profits approaching $5. He maintained a buy rating on Nvidia shares.
“We now believe ~$5 EPS could be achievable by 2025 as the NVL72/36 system backlog is materially larger than just two months ago as hyperscalers' 2025 budgets firm up,” he added.
Nvidia offers a solid near-term outlook
The outlook for the current year is also strong: In May, Nvidia told investors that revenue for the current quarter would be about $28 billion, with a margin of error of 2%. It offered that estimate even though it said the Blackwell processor and software system would not begin shipping until the second half of 2024.
Analysts were concerned that a gap between the current H100 chips and Blackwell's new offering would create something of an air pocket in revenue as customers would cancel orders for the older chips and wait for the newer system.
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Nvidia is also moving forward with Rubin, another advanced line of ai-powered chips, which CEO Jensen Huang unveiled during a speech at National Taiwan University in Taipei last month.
The new Rubin systems, named after American astronomer Vera Rubin, credited with discovering so-called dark matter, will be deployed in 2026, Huang said.
Nvidia shares rose 0.84% in pre-market trading to open at $126.89 each.
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