Nvidia hits record high as AI boom lifts bets on another strong forecast
NVIDIA shares hit an all-time high on Tuesday (Aug 22) in a buildup in expectations over the quarterly results of the chip designer that has been the biggest beneficiary of a boom in artificial intelligence.
Rising bets that Nvidia’s revenue target will once again surpass Wall Street estimates have lifted the stock about 19 per cent from a two-month low hit last week.
Shares were last up 0.4 per cent at US$471.55 after hitting a record high of US$481.87 minutes after the market opened and crossing its previous peak of US$480.88 on Jul 14.
Analysts expects Nvidia, which dominates the market for chips used to power generative AI like ChatGPT and many such services, to forecast 110 per cent growth in third-quarter revenue to US$12.50 billion when it reports results on Wednesday.
“It might be the most important report of this earnings season. We want to hear that they can build on the amazing quarter they had last quarter,” said Dennis Dick, market structure analyst at Triple D Trading.
The company had in May forecast second-quarter revenue that was more than 50 per cent above expectations. That pushed its market capitalisation above US$1 trillion, making its stock the best performer on the S&P 500 index.
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Nvidia’s blowout forecast last quarter had also sparked a rally in AI-stocks as well as Big Tech, making it one of the key drivers for the US stocks rally this year.
“To keep the stock price where it is, we would want to see bottom line start to support those share gains,” said Brian Mulberry, client portfolio manager at Zacks Investment Management, which holds Nvidia shares.
At least 19 brokerages have this month raised their target price on Nvidia, pushing the median view to US$500, which is a 6.5 per cent increase to stock’s last closing price. Nvidia shares have more than tripled in value so far this year.
Nvidia saw the highest increase in popularity among hedge funds in the second quarter, a report from Goldman Sachs showed on Monday.
“Nvidia (and) AI story is what is driving the market right now. If Nvidia were to miss (expectations), this market would be in a world of pain,” Dick said. REUTERS
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