Nvidia (NASDAQ:NVDA) stock is soaring 30% and trending on social media after the chip maker reported stronger-than-expected results. However, the shares appear to be rallying primarily because of renewed excitement about the company’s opportunities in artificial intelligence ( ).
Speaking on Nvidia’s earnings call held yesterday, CEO Jensen Huang stated that the advent of AI is only in its beginning stages. He explained that AI applications dedicated to specific industries still must be developed, Bloomberg reported. The CEO added that companies are looking to quickly incorporate AI into all of their operations.
In the wake of Nvidia’s results and earnings call, multiple analysts were very upbeat about the potential of the AI market to boost NVDA. “We believe this is just the beginning of a paradigm-altering generative AI wave. So far, it seems that Nvidia is the one capturing nearly all the economics,” Barclays analyst Blayne Curtis wrote in a note to investors.
“Generative AI and large language/transformer models are driving accelerating demand for Nvidia’s accelerated compute/networking platforms and software solutions,” wrote JPMorgan analyst Harlan Sur. The analyst hiked his price target on NVDA stock to $500 from $250 and kept an “overweight” rating on the shares.
NVDA Stock Soars on Q1 Results and Q2 Guidance
Nvidia’s Q1 earnings per share came in at $1.09, excluding one-time items, versus analysts’ average outlook of 92 cents, while its sales fell 13% year-over-year to $7.19 billion, versus the mean estimate of $6.5 billion. The company reported that its data center sales climbed 14% YOY, driven by the demand for its graphics processing units for use in developing AI and cloud computing.
More impressively, for Q2, Nvidia expects its sales to come in within 2% above or below $11 billion, versus analysts’ average outlook of $7.18 billion.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.