Nvidia’s stock price surged to an all-time high on Monday, January 8th 2023, after the company made several announcements that reinforced its leadership position in AI and data center computing. The stock rose over 4% to set a new record closing price of $165.29, valuing the company at over $412 billion.
Strong Quarterly Earnings Driven by Data Center and Gaming Revenue
The stock rally came after Nvidia reported fiscal third quarter earnings last November that beat expectations. Revenue grew 39% year-over-year to $5.93 billion, with substantial growth seen in the key data center and gaming end markets.
Data center revenue grew 31% to $3.83 billion, while gaming revenue was up 4% to $1.57 billion. Profits also increased an impressive 27% compared to the same quarter last year.
| Financial Metric | Q3 2023 | Change Year-over-Year |
|---|---|---|
| Revenue | $5.93 billion | +39% |
| Data Center Revenue | $3.83 billion | +31% |
| Gaming Revenue | $1.57 billion | +4% |
| Net Income | $1.46 billion | +27% |
This steady financial performance gave analysts and investors confidence that demand for Nvidia’s market-leading graphics cards and AI accelerators remains strong heading into 2024.
Upgraded AI Chip Architectures Position Nvidia to Dominate Generative AI Market
At the heart of the enthusiasm around Nvidia is the company’s upgraded AI chip architectures that were announced last week. This includes the H100 data center GPU built on the advanced Hopper architecture, as well as new Quantum-2 networking platforms.
Analysts widely praised these technology upgrades, with investment bank BofA stating they can generate nearly $100 billion in free cash flow for Nvidia over the next two years. The new H100 in particular is perfectly suited for generative AI models like chatGPT, which are seeing surging demand.
Nvidia founder and CEO Jensen Huang emphasized that these powerful AI and computing platforms form the core “technology foundation for the new internet.” As AI and metaverse applications drive an exponential growth in demand for data center capacity over the next decade, Nvidia looks poised to dominate thanks to its advanced silicon and software ecosystems.
Record Data Center and AI Sales Expected Through 2024
In light of the positive momentum around Nvidia’s new Hopper-based offerings, analysts have grown even more bullish on the stock’s outlook. Investment bank DA Davidson recently upgraded their price target to $300 per share after moderating their views last year. This implies 86% upside for the stock over the next 12 months.
Other analysts also see substantial room for further share price appreciation. Investing.com highlighted one analyst report forecasting 57% upside for Nvidia, with a $270 price target.
Market research firm Barchart sees potential for even more meteoric gains, stating Nvidia could soar 50% higher to over $736 per share within the next year. They see accelerating data center revenue driving significant free cash flow growth.
With data center spending by hyperscale cloud companies expected to double by 2025, Nvidia looks ready to ride this wave to new heights thanks to its commanding lead in AI accelerators. Its new Hopper-based offerings are arriving just in time to power next-generation AI workloads.
2024 is shaping up to be another standout year for Nvidia’s financial performance as its technology leadership in key secular growth markets continues to compound. While the stock’s valuation appears stretched on traditional metrics, its dominant position enabling the AI future means investors likely have not seen the end of Nvidia’s gravity-defying run.
To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.
