'Cosmological', 'Just wow', 'Dropping mics and jaws', 'Mother of all cycles': Analysts discuss Nvidia (NVDA) as shares rally 25%

May 24, 2023 5:01 PM EDT
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(Updated - May 25, 2023 5:34 AM EDT) -- Nvidia (NASDAQ: NVDA) shares skyrocketed in pre-market Thursday trading after the chipmaker offered a blockbuster outlook for the second quarter.

The company's fiscal first-quarter results easily topped analyst estimates. Nvidia shares are up 25% in pre-market trade on Thursday following the report.

NVIDIA announced earnings per share of $1.09 on revenue of $7.19 billion. Analysts polled by anticipated EPS of $0.92 on revenue of $6.52B.

First-quarter revenue in its data center business reached a record $4.28B, up 14% from a year ago and up 18% from the previous quarter. That helped offset weakness in its gaming business, with revenue down 38% to $2.24B from a year ago, but still better than what Street was expecting.

“A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process," the company said.

“Our entire data center family of products — H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand and BlueField-3 DPU — is in production. We are significantly increasing our supply to meet surging demand for them,” it added.

Looking ahead to fiscal Q2, the company guided revenue in a range of $11.00B, plus or minus 2%, crushing the Street expectations for $7.13B.

The chipmaker is experiencing a massive boost to chip demand from growing interest in artificial intelligence (AI). CFO Colette Kress said on the earnings call that demand for high-end chips "has extended our data center visibility out a few quarters, and we have procured substantially higher supply for the second half of the year."

Following a massive beat-and-raise quarter, Wall Street analysts are sharply rising numbers on Nvidia. Baird analysts upgraded the stock to Outperform.

Rosenblatt analyst Hans Mosesmann nearly doubled the price target to a new Street-high of $600 per share after an "epic print and guide."

"Nvidia’s epic print and guide on the massive inflection of global generative AI is historical on so many levels and consistent with a needed view that there is a secular change in semiconductor growth ahead. We call this the Mother of All Cycles or MOAC," Mosesmann said in a note to clients.

Bernstein analyst Stacy Rasgon also hiked the price target, going to $475 from the prior $300 per share.

"In the 15+ years we have been doing this job we have never seen a guide like the one NVDA just put up with FQ2 outlook that was by all accounts cosmological, and which annihilated expectations," Rasgon said.

With shares up 109% year-to-date through Wednesday's close, Rasgon also discussed what investors should to with Nvidia stock at current levels.

"Everyone has been looking for ways to play AI that aren't as expensive as NVIDIA given the run this year. However, perhaps NVDA itself is the best way to accomplish that (while still undeniably pricey it is clearly not quite as expensive as it looked) and the narrative, backed up by actual products and sales, still has legs in our opinion."

Additional reporting by Senad Karaahmetovic

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