Nvidia generated revenue of $13.51 billion in the second quarter and predicted that revenue would reach $16 billion in the third quarter, the company reported late on Wednesday. Both results exceeded analyst expectations, as per Refinitiv.
Santa-Clara, California-based Nvidia also said it would buyback $25 billion worth of its shares.
Nvidia’s stock rose as high as $502.66, surpassing a record high hit earlier this week, and further entrenching itself as the first trillion-dollar chip maker. It pared some of those gains and was last up 1.8% at $479.82. The stock is now up 227% year-to-date.
The technology-heavy Nasdaq Composite, buoyed by Nvidia’s performance, rose in early trading before falling by 1.32%.
“The entire market has been in ‘sell the news’ mode, everybody was breathlessly awaiting Nvidia’s print and guide,” said Michael James, equity trading managing director at Wedbush Securities.
“Clearly it was much better than expectations, but it was an incredibly crowded long, as was technology in general, given that big rally we had yesterday going into the Nvidia print and traders were primed to sell initial up moves,” James added. More than 20 brokerages raised their target price on Nvidia after the earnings, with Elazar Advisors and Rosenblatt Securities being among the most bullish with targets of $1,600 and $1,100, respectively, according to Refinitiv data.
The median analyst price target on the stock has nearly doubled to $600 since May when the company forecast a 50% jump in second-quarter revenue.
“Simply stated, while it beat all expectations, there was a great deal of expectations built into that above and beyond where the analysts were,” said Art Hogan, chief market strategist at B. Riley Wealth.
Investor euphoria for Nvidia is driven by its dominance in the rise of ChatGPT and other generative AI technology, most of which is powered by its high-end graphics chips.
Short sellers of Nvidia’s stock have made $826 million in mark-to-market losses on Thursday, data from analytics firm S3 Partners showed.
“The most important thing in what Nvidia said is that there’s trillion-dollar plus of data centers servicing the cloud that are basically converting a lot to their chips and I think that’s a brand new item, which is one of the reasons you’re seeing people jerk up their price targets,” said Tom Plumb, chief executive and lead portfolio manager at Plumb Funds.
