AI boom helps Nvidia shares reach new peak ahead of quarterly results
The logo of NVIDIA as seen at its corporate headquarters in Santa Clara, California, in May of 2022
Nvidia shares reached a new peak on Tuesday in anticipation of the chip designer's upcoming quarterly earnings report, reflecting its reliance on the artificial intelligence upswing.
However, the stock experienced a decline of 1.1 per cent shortly after hitting the record high of $481.87 as trading commenced. This fleeting surge surpassed its previous peak of $480.88, achieved on July 14.
Nvidia's shares have gained approximately 19 per cent after hitting a two-month low, driven by growing speculation that Nvidia's sales projections will once again exceed Wall Street estimates.
Analysts cautiously predict that Nvidia, a dominant force in the market for chips essential to power generative AI services like ChatGPT and others, could unveil third-quarter sales totaling $12.50 billion. This projection represents a substantial 110 per cent increase from the previous year's figures.
Reuters cited Dennis Dick, Triple D Trading's market structure analyst, saying, "It could be the most important earnings report of the year. We want to hear that they can build on the fantastic quarter they had last quarter."
In May, the company predicted second-quarter revenue that exceeded expectations by over 50 percent, an outcome that catapulted its market valuation past $1 trillion. This achievement positioned it as the standout performer on the S&P 500 index.
Nvidia's remarkably positive projection from the previous quarter triggered a surge in AI-related stocks and their Big Tech counterparts. Consequently, it played a pivotal role in fueling this year's stock market upswing in the United States.
During this month alone, at least 19 brokerage firms have revised their target price for Nvidia, culminating in a consensus estimate of $500. This represents a 6.5 percent escalation from the stock's most recent closing value. Notably, Nvidia's shares have quadrupled in value so far this year.
According to a Monday report by Goldman Sachs, Nvidia experienced the most pronounced surge in hedge fund interest during the second quarter.
"The Nvidia AI story is driving the market right now.If Nvidia fails to meet expectations, the market will suffer greatly," Danis Dick was quoted Reuters as saying.
(Inputs from Reuters)
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