- August 23, 2023
- AI in Business
With growing confidence that Nvidia will once again surpass the projections set by Wall Street, the stock has experienced a remarkable resurgence of about 19% from its recent low over the course of two months.
During Tuesday’s trading session, Nvidia’s shares achieved an all-time high, a testament to the mounting anticipation surrounding the chip designer’s quarterly earnings. This company has emerged as the primary beneficiary of the AI boom, which has undoubtedly contributed to its meteoric rise.
This upward trajectory is fueled by the increasing belief that Nvidia’s revenue target will exceed expectations, thereby sparking a significant appreciation in its stock value. Notably, the shares were briefly trading at $481.87, breaking the previous record of $480.88 established on July 14. As the market evolved, the stock settled at $471.55, marking a 0.4% increase.
Industry experts anticipate Nvidia’s forthcoming earnings report, scheduled for Wednesday, to reflect remarkable growth. Analysts predict a staggering 110% increase in third-quarter revenue, projecting it to reach $12.50 billion. This projection is especially significant considering Nvidia’s dominance in supplying chips that power generative AI technologies such as ChatGPT and various similar services.
Dennis Dick, a market structure analyst at Triple D Trading, emphasized the significance of this upcoming report, referring to it as potentially the most crucial announcement of the earnings season. He articulated the collective desire to witness Nvidia building upon the exceptional performance of the previous quarter.
Earlier this year, Nvidia outperformed expectations, leading to a surge in its market capitalization, surpassing $1 trillion and solidifying its status as the leading performer on the S&P 500 index. This extraordinary forecast also ignited a broader rally in AI and major tech stocks, emerging as a pivotal driving force behind the upward trajectory of the US stock market throughout the year.
Brian Mulberry, the client portfolio manager at Zacks Investment Management, which holds Nvidia shares, highlighted the importance of aligning the stock’s price with tangible financial performance. He emphasized the necessity for the company’s bottom line to support its stock gains, thus ensuring its continued market success.
Reflecting the growing enthusiasm for Nvidia, an increasing number of brokerages have raised their target prices for the company throughout the current month. This surge in confidence has elevated the median view to $500, constituting a 6.5% rise from the stock’s most recent closing price. Impressively, Nvidia’s shares have more than tripled in value over the course of this year.
A recent report from Goldman Sachs highlighted Nvidia’s remarkable popularity among hedge funds during the second quarter, further underlining its influential role in the market.
Dennis Dick reiterated the centrality of Nvidia and its AI narrative in driving the current market trends. He cautioned that any disappointment in meeting expectations could lead to significant market turbulence.
