Trading Nvidia earnings next week: Analysts say 'AI gold rush' should boost outlook

Published Thu, May 18 202312:04 PM EDT

Proliferating artificial intelligence tailwinds should lift Nvidia 's guidance when the chip giant posts earnings results after the close on Wednesday, according to some Wall Street analysts. "Overall, we expect better results/guidance, driven largely by the ongoing AI gold rush and subsequent DC GPU demand," wrote Susquehanna Financial Group's Christopher Rolland in a note to clients on Thursday. The chipmaker, at the center of the latest generative AI arms race , has seen its stock more than double this year. Robust demand for AI, which has boosted the market , should continue to benefit Nvidia as well. Many on Wall Street view the company as the dominant AI player in an ever-expanding addressable market. Long term, Rolland said he expects Nvidia to benefit from aftermarket GPU share gains. Solid data center strength and steep prices for some of its chips should benefit Nvidia's margins, added Rolland, who retained his positive rating and lifted his price target to $350 from $310 a share. The adjustment reflects 16% upside from Wednesday's close. "In short, we are expecting great things from DC, with Gaming continuing its recovery," he wrote. Oppenheimer's Rick Schafer seemed to agreed with Rolland's perspective, calling Nvidia a "best-in-class play on AI adoption." This "sense of urgency" surrounding the technology should also lift the company's results and forecast, he added. Schafer views the company's data center business as a beneficiary of cloud vendors building up AI infrastructure. He lifted his price target nearly 17% from $350 from $300 and reiterated his outperform position. He referred to its hardware platform as a "cornerstone" of the proliferating AI market. "Gaming channel inventory has normalized and is poised for accelerated growth into 2H," Schafer wrote. "NVDA's AI-led structural growth thesis intact. DC, high-performance gaming, and auto are a triple play for sustained growth." NVDA YTD mountain Nvidia shares in 2023 While long-term excitement surrounding AI and the Nvidia's prospects should persist, some analysts remain slightly cautious heading into the print. Deutsche Bank's Ross Seymore retained his hold rating on shares, saying in a Wednesday note that a slower-than-expected rebound in gaming and data center supply constraints could cap some of the upside potential. Despite these concerns, the analyst said he sees no signs of AI optimism dying down. "While these near-term offsets may limit the magnitude of estimate revisions, we expect the AI-enthusiasm to carry the day and likely continue to provide a strong safety net for the share price despite its somewhat amazing +107% appreciation YTD," he said. — CNBC's Michael Bloom contributed reporting