Nvidia’s Strong Earnings Outlook Spurs Price Target Updates

Nvidia stock

Nvidia (NASDAQ:NVDA) stock increased in early Monday trading, approaching its all-time high in March, as analysts swiftly adjusted their price targets for the global leader in AI chips in advance of its highly anticipated earnings report for the first quarter, which is scheduled for later this week.

Nvidia saw a remarkable increase in market value after it launched the current AI revolution last year with a substantial revenue prediction related to a surge in demand for its benchmark H100 processors. It added over $1.5 trillion in the previous 12 months, making it one of the top-performing stocks of 2024 with an 88% increase.

Analysts expect the chipmaker, which is renowned for its semiconductors used in gaming and automotive sectors as well as its AI capabilities, to report a net income of $13.2 billion, or $5.63 per share, for the three months ending in April. This represents a fivefold increase over the same period last year, with a gross profit margin of about 77%, which is 10 percentage points higher than the same period last year.

Group revenue is estimated to be $24.6 billion, which is triple the first-quarter total from last year. Quarterly sales are projected to surpass the $30 billion mark by the end of the current fiscal year, which ends in January.

Revenue from data centers, which is the group’s main source of income, is anticipated to rise by a staggering 400%, reaching $21.26 billion. Gaming revenue is projected to increase by 20% to $2.68 billion, while automotive revenue is expected to remain stable at $296.4 million.

Stifel analyst Ruben Roy raised his price target for Nvidia by $175 to $1,085 per share, emphasizing the continued demand for H100/H200 amid growing anticipation for Blackwell, the company’s upcoming line of AI graphics processing units (GPUs) that are scheduled for a later release this year.

Barclays analyst Blayne Curtis also sees a surge in near-term sales driven by pricing power from the group’s H100 and H200 GPU offerings. Curtis raised his price target for Nvidia by $250 to $1,100 per share. Curtis and his team anticipate more than $1 billion in upside in April and $2 billion in July, due in part to the introduction of H200, which is expected to begin shipping in the July quarter.

Looking ahead, Curtis highlights the significant revenue potential from the ramp of the GB200, an advanced series of AI-focused processors that offer double the speed of Nvidia’s current H100 and H200 chips, along with improved energy efficiency and versatility.

Analysts predict an average selling price that is about 40% higher than the current range for H100 chips, which typically sell for $30,000 to $40,000 each.

Baird analyst Tristan Gerra echoes this view, highlighting Nvidia’s unmatched product offerings for this year and next, combined with reduced lead times that are expected to increase market share in the second half of the year. Gerra raised his price target for Nvidia by $150 to $1,200 and also revised GPU unit shipment forecasts for this year and the next. He kept an “outperform” rating on the stock.