Nvidia shares surged after the company reported its quarterly earnings and outlook, exceeding expectations and alleviating concerns about supply constraints and demand in China. Analysts applauded the results, with Stifel analyst Ruben Roy emphasizing that the company’s earnings were even higher than whisper numbers, unofficial estimates that are typically more optimistic than consensus forecasts. Roy raised his rating on Nvidia to Buy and increased the target price. KeyBanc analyst John Vinh echoed this sentiment, stating that Nvidia’s management expects product supply to increase next year, satisfying the growing demand for AI chips. Vinh raised his target price on the stock and maintained an Overweight rating.
Nvidia’s revenue from China fell within the company’s historical range, indicating that the positive results were not solely driven by Chinese orders being pulled forward due to potential future US restrictions. UBS analysts highlighted that Nvidia stated it could reallocate Chinese shipments of specific chips if needed to meet US export restrictions. While competition in the AI chip market is important for innovation, Nvidia currently enjoys a dominant position, estimated to hold around 90% market share for AI-related GPUs. The company’s strong performance suggests that it will remain the preferred bet on AI technology for now, according to Oppenheimer’s research note. However, other companies such as AMD and Intel may still have opportunities to provide rival AI chip offerings.
In response to Nvidia’s positive earnings report, other hardware and software companies also saw modest gains as investors bet on the continued growth of AI technology. Advanced Micro Devices (AMD), Microsoft, and Alphabet all experienced premarket increases. While competition remains important for the industry, Nvidia’s increasing attractiveness through software development and industry partnerships may narrow the window for alternative companies to grow their AI chip offerings. Overall, Nvidia’s strong financial results and favorable outlook have reassured analysts and investors about the company’s robust growth potential.