(Reuters) – Frankfurt-listed Nvidia shares jumped 8.7% on Thursday, lifting technology stocks around the world, after the company forecast quarterly revenue that beat expectations and announced a $25 billion buyback.
The results, announced late Wednesday, were fueled by an artificial intelligence (AI) boom fueled by demand for its chips, and will cement its place in the trillion-dollar market capitalization club it entered earlier this year.
More than 20 brokerages raised their target price for Nvidia after the earnings update, according to Refinitiv data, with Elazar Advisors being the most bullish at $1,600.
This represents a more than three times higher than the last close at $471.16.
Along with Rosenblatt Securities at $1,100, they are the only ones with targets above $1,000 for Nvidia. The chipmaker’s average price target is $567.
Nvidia has been the biggest beneficiary of the rise of ChatGPT and other AI applications, nearly all of which are powered by its own graphics processors.
Its stock value has tripled this year, adding more than $700 billion to its market capitalization and making it the first trillion-dollar chip company.
“Everyone has been looking for ways to run AI that aren’t as expensive as Nvidia’s due to run this year. However, in our opinion, NVDA itself remains the best way to go about it,” said Bernstein analysts led by Stacy A. Rasgon.
“Given the volume of the earnings revisions, we think the stock will continue to be cheaper than it was in print.”
The results also show they are keeping Wall Street’s rally alive, with futures tracking the technology-heavy Nasdaq 100 jumping more than 1%, while futures for the S&P 500 rose 0.7%.
“The Nvidia news has a boosting effect on technology stocks, if only by confirming that all the talk about the AI craze wasn’t empty, after all,” said Ipek Ozkardskaya, senior analyst at Swissquote Bank.
Much depends on Nvidia delivering strong results, as most of the S&P 500’s more than 15% gains year-to-date have come from the AI-led rally in Nvidia and other big tech stocks.
Analysts warned that if the results were not significant enough, this could hinder the rally as investors will question the high valuations of technology stocks on the back of rising returns. (we/)
Elsewhere, shares of Taiwan Semiconductor Manufacturing Company (TSMC), which supplies Nvidia, rose 2.2%.
European chip stocks also rose, with ASM International, BE Semiconductor and Aixtron all up about 2% each. The European Technology Index rose 1.1% and was among the biggest gainers in the regions. (This story has been rewritten to correct the spelling of “Nvidia” in paragraph 14 and “Bernstein” in paragraph 8)
(Reporting by Susan Mathew in Bengaluru; Editing by Varun HK)
