The boom in the use of artificial intelligence continues to ensure strong growth for the chip company NVIDIA.
In the last quarter, sales of 22.1 billion US dollars (around 20.3 billion euros) were more than three times as high as the year before. Analysts on average had expected $20.4 billion. Shares made significant gains on Thursday.
The key figures of the semiconductor company, which specializes in artificial intelligence, were once again remarkably good, wrote analyst Stacy Rasgon from Bernstein Research in a study. Despite the high market expectations, the results were clearly above. The expert increased his price target from $700 to $1,000. He sees plenty of price potential and continues to rate the shares as “Outperform”.
The shares were last traded on the Tradegate trading platform at the equivalent of $758. That is a price increase of a good twelve percent compared to the US closing price of the previous day and would mean a record in the main US business. The price increase since the end of 2022 would therefore grow to almost 420 percent. This would give NVIDIA a market value of almost $1.9 trillion, which would put the company ahead of Amazon and Google parent Alphabet (Alphabet A (ex Google)) in terms of market capitalization and make it the third most valuable US company behind Microsoft and Apple.
At $18.4 billion, the business with technology for data centers even brought in five times as much sales as in the same quarter of the previous year. The NVIDIA technologies, originally developed for graphics cards, have long been proven in computing work to train applications with artificial intelligence. This is causing NVIDIA’s business – and stock market value – to rise rapidly.
The numbers were eagerly awaited. Observers assumed that the slightest hint of a slowdown in growth would have sent the price down. However, NVIDIA did not disappoint.
The outlook for the current quarter was also above expectations. NVIDIA announced revenues of around $24 billion, while the market had expected an average forecast of around $22 billion.
NVIDIA’s quarterly profit jumped from $1.4 billion to almost $12.3 billion within a year. The use of artificial intelligence has reached a turning point and demand is increasing worldwide, emphasized NVIDIA boss Jensen Huang.
NVIDIA’s business is being slowed somewhat by the US government’s measures against deliveries of AI technology to China. NVIDIA is not allowed to sell its most modern chip systems, which are used to train artificial intelligence, there. Washington points out the risk that the technology could be used for military purposes. NVIDIA has not yet received an export license for a slimmed-down version of the devices, which is why it recently delivered chips whose performance is below the specified limits.
China had a mid-single-digit percentage share of data center technology business in the last quarter, it said. The US government wants NVIDIA to be as successful as possible in China, but within performance constraints, Huang said.
NVIDIA “delivers” and starts the price rally
The explosive growth of the chip flagship NVIDIA triggered euphoria and price records across industries on Thursday. Technology stocks were in high demand worldwide. In the expectation that with artificial intelligence and the necessary semiconductors and components, profits in the industry will skyrocket in the coming years.
Nvidia turned over $22.1 billion in the last quarter, three times as much as a year earlier and almost 10 percent more than experts had expected on average. This rapid growth caused the share price to rise by 16.17 percent in US trading to $783.82. This means that the stock market value of the California company has reached the $2 trillion mark.
NVIDIA now only has Apple and Microsoft ahead of it in terms of market value.
The outlook for the current quarter also exceeded expectations. NVIDIA announced revenues of around $24 billion, while the market had expected an average forecast of around $22 billion.
It is probably above all the optimistic outlook that is driving up tech prices in the USA, Asia and Europe. In the Japanese leading index Nikkei 225, for example, the semiconductor stocks Advantest and Tokyo Electron rose by 7.5 and 6 percent. On Europe’s stock exchanges, the premiums for ASML NV, STMicroelectronics and BE Semiconductor reached up to 15 percent. Chip producers and their suppliers were also in high demand on the German market: Infineon, Elmos Semiconductor, Aixtron (AIXTRON SE) and SUSS MicroTec SE.
The US stock exchange Nasdaq was recently no longer so sure whether NVIDIA would be able to “deliver”. After all, the price had shot up by 50 percent from the beginning of the year to its record high on February 12th. Even more impressive: the price has increased fivefold since the beginning of 2023. In the last two days, investors let some air out of the stock. But now market strategist Jürgen Molnar from the broker Robomarkets was able to determine: “NVIDIA is turning up the music at the stock market party again.” With the side effect that the good mood also pushed the German leading index DAX 40 to a record high.