NVIDIA leads the AI wave, with stock prices reaching historic highs!

Nvidia has released stunning financial results, with second-quarter revenue guidance far exceeding market expectations, sending Nvidia's stock up 30% before the market opens, which means Nvidia's stock price could hit a historic high tonight.

In addition, after the financial report was released, JPMorgan raised its target price for Nvidia from $250 to $500.

Shocking Performance

According to FactSet data, Nvidia's adjusted earnings per share for the first quarter were $1.09, compared to Wall Street's consensus estimate of 92 cents. First-quarter revenue was $7.2 billion, better than analysts' expected $6.5 billion.

In the first quarter, gaming revenue was down 38% from a year ago, but sales in its data center division grew 14% due to demand for AI.

The key is that for the second quarter, Nvidia's revenue guidance is $11 billion, far higher than the average analyst expectation of $7.2 billion.

The financial report reflects strong downstream demand for Nvidia's data center and a recovery in gaming graphics card inventory.

Surge in Demand

Nvidia CEO Jensen Huang said: "The computing industry is undergoing two simultaneous transformations - accelerated computing and AI generation." "Our entire data center product line - H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand, and BlueField-3 DPU - are all in production. We are significantly increasing supply to meet the surge in demand for them."

On the conference call, Nvidia management said they saw broad demand from cloud computing service providers, large consumer internet companies, startups, and enterprises for AI projects. The company also said it had received "significant increases" in supply commitments from suppliers in the second half of this fiscal year compared to the first half to meet higher demand.

Nvidia CFO Colette Kress said visibility into orders had improved this quarter. Customers are providing Nvidia with their long-term plans as they build new data centers.

Institutions Significantly Raise Expectations for Next Year and the Year After

CITIC Securities said it has raised its forecast for Nvidia's FY2024-FY2026 revenue to $43.7 billion, $52.6 billion, and $58.3 billion, respectively (up from $31.9 billion, $37.2 billion, and $43.5 billion).

It also raised its forecast for Nvidia's FY2024-FY2026 non-GAAP net profit to $17.2 billion, $21.1 billion, and $22.9 billion, respectively (up from $11.6 billion, $14.7 billion, and $17.7 billion).

The current stock price corresponds to a PE (non-GAAP) of 45/36/22 times. We continue to be optimistic about Nvidia's global leadership position in the AI field and its expanding business space, and we see the company's medium- to long-term investment value.

CITIC Securities said that in the short term, with the increase in upstream wafer foundry capacity, Nvidia's performance is expected to continue to benefit from the increase in demand for GPUs brought about by Chatgpt. In the medium and long term, Nvidia has established a leading competitive advantage in the fields of accelerated computing hardware (GPU, DPU, CPU), mature programming and toolchain software (CUDA, DOCA, etc.), and vertical specialized software, and is transforming from a chip company to a comprehensive platform manufacturer.