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A “turning point”.
Nvidia (NASDAQ:NVDA) quarterly results and guidance stunned even Wall Street’s most passionate bulls and firmly cemented the GPU giant as the poster child for generative AI, an area where spending has apparently surged Without limits.
Looking to the first quarter of fiscal 2025, Nvidia expects revenue of $24 billion, plus or minus 2%. Analysts expected revenue of $21.9 billion for the company led by Jensen Huang. Adjusted gross margin is expected to be approximately 77%, plus or minus 50 basis points, while adjusted operating expenses are expected to be approximately $2.5 billion.
“Accelerated computing and generative artificial intelligence have reached the tipping point,” Huang said in a statement. “Demand is increasing around the world among businesses, industries and nations.”
Huang went into more depth during his earnings call about how huge the generative AI movement is.
“Generative AI is a new application,” Huang, 61, said. “It’s enabling a new way of building software. It’s a new way of computing. This is enabling a whole new industry. This is driving our growth.”
Nvidia shares increased by more than 14% in pre-market trading on Thursday, while other semiconductor stocks such as AMD (AMD), Marvell Technology (MRVL), Taiwan Semiconductor (TSM), Intel (INTC), Qualcomm (QCOM), Broadcom (AVGO) and Micron Technology ( MU) increased sharply.
Several Wall Streeters were keen to praise Nvidia’s quarterly results and guidance. Seeking Alpha has compiled a list of some of their reactions.
Bank of America
“Perhaps the most important new data point in NVDA’s earnings forecast was that AI inference contributed nearly 40% of the AI compute mix in fiscal 24/23. AI inference is related to revenue-generating AI that is expected to be more competitive, as opposed to AI training that NVDA already dominates,” analyst Vivek Arya wrote in a note to clients.
“Second, we highlight the company’s positive commentary regarding tight supply, low dependence on China (only a mid-single-digit percentage of data center sales compared to 20%-25% before restrictions), to the new pipeline, the growing sovereign demand for AI, among others.”
Arya reiterated its buy rating on Nvidia and raised its price target from $800 to $925, raising its 2024 and 2025 earnings estimates by 13% and 15%, respectively. He said the next catalyst will be Nvidia’s GTC conference next month, which could provide new details on its product pipeline, including the B100 and GB200.
Quote
Nvidia expects its data infrastructure installed base – currently at about $1 trillion – to double over the next five years, leading Citi analyst Atif Malik to sharply raise his earnings estimates.
Malik, who reiterated his buy rating and raised his target from $575 to $820, raised his earnings per share estimates for fiscal 2025 and 2026 by 58% and 75%, respectively, to “better align” with AI total addressable market analysis.
Benchmark
While strong results were expected, the size of the guidance – relative to Wall Street expectations – was a “partially positive surprise,” benchmark analyst Cody Acree said.
Acree reiterated its buy rating and raised its price target to $1,000 from $625.
Wedbush Securities
Nvidia’s quarterly results and guidance are seen as a “watershed moment” that reiterates that the artificial intelligence revolution has just begun, Wedbush Securities analyst Dan Ives said.
“For elite, transformative technology stories like Nvidia and the AI revolution, investors need to see the forest through the trees to where this spending wave (and estimates) can head over the next 3 years and we believe 60%-70% of businesses will do so. ultimately, we track the path of AI use cases as we estimate $1 trillion in incremental spending on AI over the next decade,” Ives wrote.
“Right now we’re only talking about generative AI in businesses, with the consumer segment also on the horizon, led by Alphabet, Meta, Amazon, Microsoft and others.”
Singer Fitzgerald
The findings and guidance were seen as a “Goldilocks scenario,” as management also pointed out that new products, such as H200, Spectrum-X and B100 will likely face shortages, Cantor Fitzgerald analyst CJ Muse said. This suggests growth will continue “well” into 2025 and earnings could approach $30 per share.
Muse maintained its Overweight rating and raised its price target to $900 from $775.
JP Morgan
Not only were the results and guidance impressive, but Nvidia provided examples of customers who have benefited financially from AI, including ServiceNow (NOW), which achieved its largest net contribution in terms of annual contract value net, and Microsoft (MSFT), which saw 365 Copilot grow faster in the first two months than other products in the Microsoft 365 enterprise suite, JP Morgan analyst Harlan Sur said.
Sur reiterated its Overweight rating and raised its price target to $850 from 650 after the results.
(This story has been updated to include comments from JP Morgan.)