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A “game changing moment.”
Nvidia's (NASDAQ:NVDA) quarterly results and guidance stunned even the most impassioned bulls on Wall Street and firmly solidified the GPU giant as the poster boy for generative artificial intelligence, an area where spending seemingly has no limit.
Looking to the first-quarter of fiscal 2025, Nvidia expects revenue of $24B, plus or minus 2%. Analysts were forecasting $21.9B in revenue for the Jensen Huang-led company. Adjusted gross margin is forecast to be around 77%, plus or minus 50 basis points, while adjusted operating expenses are expected to be around $2.5B.
“Accelerated computing and generative AI have hit the tipping point,” Huang said in a statement. “Demand is surging worldwide across companies, industries and nations.”
Huang went further in depth during its earnings call on how enormous the generative AI movement is.
“Generative AI is a new application,” the 61-year-old Huang said. “It is enabling a new way to create software. It's a new way of computing. This is enabling a whole new industry. This is driving our growth.”
Nvidia shares surged more than 14% in premarket trading on Thursday, while other semiconductor stocks such as AMD (AMD), Marvell Technology (MRVL), Taiwan Semiconductor (TSM), Intel (INTC), Qualcomm (QCOM), Broadcom (AVGO) and Micron Technology (MU) also rose sharply.
Several Wall Street firms were effusive in their praise following Nvidia's quarterly results and guidance. Seeking Alpha has compiled a list of some of their reactions.
Bank of America
“Perhaps the most important new datapoint in NVDA’s earnings call was that AI inference contributed nearly 40% of AI computing mix in FY24/CY23. AI inference is correlated with revenue bearing AI which is supposed to be more competitive, as opposed to AI training which NVDA already dominates,” analyst Vivek Arya wrote in a note to clients.
“Second, we highlight the company’s positive commentary around tight supply, low China dependence (only mid-single digit percent of data center sales versus 20%-25% prior to restrictions), new pipeline, rising sovereign demand for AI among others.”
Arya reiterated his Buy rating on Nvidia and bumped his price target to $925 from $800, as he raised 2024 and 2025 earnings estimates by 13% and 15%, respectively. He said the next catalyst is Nvidia's GTC conference next month, which could provide new details on its product pipeline, including the B100 and GB200.
Citi
Nvidia expects the data infrastructure installed base — currently at around $1T — to double over the next five years, which resulted in Citi analyst Atif Malik sharply increasing his earnings estimates.
Malik, who reiterated his Buy rating and boosted his target to $820 from $575, increased his earnings per share estimates for fiscal 2025 and 2026 by 58% and 75%, respectively, to “better align” with the AI total addressable market analysis.
Benchmark
Even though strong results were expected, the magnitude of the guidance — compared to Wall Street's expectations — was a “partial positive surprise,” Benchmark analyst Cody Acree said.
Acree reiterated his Buy rating and raised his price target to $1,000 from $625.
Wedbush Securities
Nvidia's quarterly results and guidance are seen as a “game changing moment” that reiterates the AI Revolution is just starting, Wedbush Securities analyst Dan Ives said.
“For the elite, transformational tech stories such as Nvidia and the AI Revolution investors must see the forest through the trees to where this spending wave (and estimates) can head over the next 3 years and we believe 60%-70% of enterprises will ultimately head down the AI use case path as we estimate a $1 trillion of incremental AI spend over the next decade,” Ives wrote.
“Right now we are only talking about generative AI in the enterprise with the consumer piece also on the horizon being led by Alphabet, Meta, Amazon, Microsoft, and others.”
Cantor Fitzgerald
The results and guidance were seen as a “Goldilocks scenario,” as management also pointed out that new products, such as H200, Spectrum-X, and B100 will likely experience shortages, Cantor Fitzgerald analyst C.J. Muse said. This suggests that growth will continue "well" in 2025 and earnings could approach $30 per share.
Muse maintained his Overweight rating and boosted his price target to $900 from $775.
J.P. Morgan
Not only were the results and guidance impressive, but Nvidia provided examples of its customers financially benefiting from AI, including ServiceNow (NOW), which had its largest ever net-net annual contract value contribution, and Microsoft (MSFT), which saw 365 Copilot grow faster in its first two months than other Microsoft 365 enterprise suite products, J.P. Morgan analyst Harlan Sur said.
Sur reiterated his Overweight rating and boosted his price target to $850 from 650 after the results.
(This story has been updated to include comments from J.P. Morgan.)