Aug 24 (Reuters) – Nvidia shares (NVDA.O) rose 6.7% to a new all-time high on Thursday, after the company unveiled a $25 billion buyout plan, coupled with record quarterly revenue fueled by strong demand for its technology-focused chips. artificial intelligence (AI).
Nvidia generated revenue of $13.51 billion in the second quarter and predicts that revenue to reach $16 billion in the third quarter. reported late Wednesday. Both results beat analysts’ expectations, according to Refinitiv.
Nvidia, based in Santa Clara, Calif., also said it would buy back $25 billion of its stock.
Nvidia’s stock soared as high as $502.66, surpassing the all-time high set earlier this week and cementing itself as the top trillion-dollar chipmaker. It pared some of those gains and rose 1.8% to $479.82. The stock is now up 227% since the start of the year.
The Nasdaq Composite, with a strong technological component (.IXIC)supported by performance from Nvidia, rose in early trading before falling 1.32%.
“The whole market was in ‘sell the news’ mode, everyone was eagerly awaiting the print version and Nvidia’s guide,” said Michael James, managing director of equity trading at Wedbush Securities.
“Obviously it was a lot better than expected but it was an incredibly loaded long position as is tech in general given the big rally we had yesterday ahead of Nvidia’s market and traders were ready to sell initial bullish moves,” added James.
More than 20 brokerages raised their target price on Nvidia after the earnings release, with Elazar Advisors and Rosenblatt Securities among the most bullish with targets of $1,600 and $1,100 respectively, according to Refinitiv data.
Analysts’ median price target on the stock has nearly doubled to $600 since May, when the company forecast a 50% rise in second-quarter revenue.
“Put simply, while this exceeded all expectations, there were a lot of expectations beyond analysts,” said Art Hogan, chief market strategist at B. Riley Wealth.
Investor euphoria for Nvidia is driven by its dominance in the rise of ChatGPT and other generative AI technologies, most of which are powered by its high-end graphics chips.
Short sellers of Nvidia shares posted $826 million in mark-to-market losses on Thursday, according to data from analyst firm S3 Partners.
“The biggest thing in what Nvidia said is that there are over a trillion dollars of data centers serving the cloud that are basically converting a lot to their chips and I think that’s a whole new thing, which is one of the reasons you see people are raising their price targets,” said Tom Plumb, Managing Director and Senior Portfolio Manager at Plumb Funds.
Reporting by Susan Mathew and Chavi Mehta in Bengaluru and Chibuike Oguh in New York; Additional reporting by Medha Singh, Shreyashi Sanyal, Shristi Achar and Amruta Khandekar in Bengaluru; Editing by Varun HK, Shinjini Ganguli and Sharon Singleton
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Chavi reports on US technology companies, including semiconductor companies. His work usually appears in the Technology and Business sections.
Chibuike primarily reports on large US-based private equity firms, including Blackstone, KKR, Carlyle and Apollo. He previously worked at Bloomberg News and holds master’s degrees in journalism from New York University and Edinburgh Napier University. Contact: 332-999-6154