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Nvidia flies to one-year highs amid AI partnertships

Investors continue to pile into Nvidia's stock as it is (once again) experiencing a massive bull market.

Nvidia is actively seeking possibilities that will transform the artificial intelligence (AI) business. This week, the corporation disclosed some of its recent achievements in this sector. Nvidia is securing ties with giants of the technology industry.

A rush of new collaboration announcements was made during the 2023 edition of Nvidia’s GPU Technologies Conference (GTC) as part of the graphics processor manufacturer’s recent push into the artificial intelligence market. These research partnerships, commercial arrangements, and simple but enormous sales of AI chips might significantly impact the company’s future growth.

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New partnerships have been announced, including with Amazon, Adobe, Google Cloud, Microsoft, and AT&T. With all these deals, the prospects for Nvidia’s long-term success in the AI industry are nearly limitless.

AI growth

In his keynote address at the conference, CEO Jensen Huang stated that artificial intelligence is approaching a turning point.

Huang stated, “We are at the iPhone moment of AI. The impressive capabilities of generative AI have created a sense of urgency for companies to reimagine their products and business models.”

Furthermore, Nvidia announced the release of new computer hardware and software frameworks to facilitate AI advancements.

Nvidia also announced that its DGX AI supercomputer platform would be offered as a service via cloud-computing partners. Oracle Cloud will first support the DGX Cloud service. Huang stated that Microsoft Azure, Google Cloud, and others will soon follow.

Finally, Nvidia expects its cuLitho software library for computational lithography to drive semiconductor innovation. The fabless semiconductor business is collaborating with chip-equipment manufacturer ASML, chip foundry TSMC, and chip design software provider Synopsys on cuLitho.

Earnings estimates are improving

Nvidia surpassed Wall Street’s profits forecast for the fiscal fourth quarter and raised its guidance for the current period on February 22. The California corporation made 88 cents per share on $6.05 billion in revenue. Nvidia’s profits decreased 33% year-over-year, while sales fell 21%.

The demand for AI processors pushed data center sales up 11% to $3.62 billion. Nevertheless, sales of gaming chips remained sluggish, declining 46% to $1.83 billion. Nvidia’s annual profits per share decreased by 25% on essentially unchanged revenue.

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On the heels of a 10% growth in revenue, analysts anticipate that Nvidia’s profitability would increase by 34% in the upcoming fiscal year. Lastly, 32 out of 46 analysts tracking NVDA shares recommend a purchase. According to FactSet, thirteen have a hold rating, and two have a sell rating.

Evercore ISI analyst C.J. Muse reiterated his outperform rating on Nvidia stock ahead of the conference.

“Given recent market developments, we believe primary investor focus will be on generative AI” at GTC, Muse said in a note to clients. “We believe Nvidia is uniquely positioned to win in this market.”

The stock price is currently trading near $270, reaching one-year highs. The next target is expected to be in the $300 region. The stock price has more than doubled since its October 2022 lows (in six months).

NVDA daily chartNVDA daily chart, source: author´s analysis, tradingview.com

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