Wall Street analysts are increasingly optimistic about Nvidia, raising their expectations for the chipmaker’s stock ahead of its quarterly earnings release on August 27. At least nine analysts have increased their 12-month price targets this week, boosting the average target by 3 per cent to approximately $US194 ($302.09), a record high. On Thursday (Friday AEST), Nvidia shares slightly decreased by 0.2 per cent to $US174.98. Nvidia is a technology company that designs and manufactures graphics processing units (GPUs) and other technologies. Its products drive advancements in gaming, artificial intelligence, and data centres.
Brian Mulberry from Zacks Investment Management noted that the upward revisions reflect the solid growth Nvidia is experiencing. Despite a recent sell-off in mega-cap technology companies, including Nvidia, which has pulled the S&P 500 Index from record highs, analysts remain confident. Investors have been taking profits and reallocating to less risky sectors amid rising doubts about potential interest rate cuts by the US Federal Reserve in September.
While Nvidia’s shares experienced a slight dip on Thursday for the third consecutive day, they are still up about 30 per cent since the company’s last earnings report in May. The company’s weight in the S&P 500 Index and its role in artificial intelligence contribute to the high expectations from analysts and investors. Positive signals from other mega-cap technology companies like Meta Platforms, Microsoft, Alphabet, and Amazon, which have increased capital expenditure pledges, also buoy expectations. Nvidia is expected to benefit from these investments, as it derives approximately 40 per cent of its revenue from these companies.
Analysts anticipate another quarter of double-digit revenue growth for Nvidia. Cantor Fitzgerald analysts, among others, have raised their price target, citing that concerns about sales in China are already factored into existing models. Other firms boosting Nvidia price targets this week include Wedbush Securities, KeyBanc Capital Markets, UBS, Morgan Stanley and Susquehanna. According to Bloomberg data, almost 90 per cent of analysts covering Nvidia rate the shares as buy-equivalent.
