Analysts scramble to raise price targets on Nvidia after super earnings. JPMorgan goes to $500

Published Thu, May 25 20236:51 AM EDTUpdated Thu, May 25 20231:48 PM EDT

Wall Street research firms cheered Nvidia 's latest quarterly report, which included a stronger-than-expected outlook , by raising their estimates on the chipmaker. Analysts were already optimistic Nvidia was well-positioned for an AI chip boom prior to Wednesday's earnings announcement. However, the company said Wednesday it expects sales of about $11 billion, give or take 2%, in the fiscal second quarter of 2024, more than 50% higher than Wall Street's prior estimates of $7.15 billion. Shares rallied almost 25% during premarket trading . Nvidia stock was up 109% year to date heading into Thursday's session. "The computer industry is going through two simultaneous transitions — accelerated computing and generative AI," CEO Jensen Huang said Wednesday in a statement. Huang added the company is "significantly increasing" its supply of data center products to meet "surging demand." Big price target hikes JPMorgan set its price target to $500 Wednesday, double its previous estimate and among the highest out of the big banks. Analyst Harlan Sur said this is the "first massive wave of demand in generative AI," with more gains to follow. He reiterated his overweight rating on the stock. "Generative AI and large language/transformer models are driving accelerating demand for Nvidia's accelerated compute/networking platforms and software solutions. The team has positioned itself as the one-stop solution provider with its portfolio of compute/networking silicon, software/managed cloud services, hardware systems and full-stack ecosystem for training/deploying complex models," Sur wrote Thursday. Evercore ISI also raised its price target to $500 on the results, up from $320. The new price target implies an additional 30% upside from where shares were trading as of Thursday 6:40 a.m. EST. "What can we say other than just WOW! … We've simply never seen a beat like this … ever," analyst C.J. Muse wrote in a Wednesday note. He said Nvidia has a long path of growth ahead and reiterated the company is one of Evercore's top picks. The firm maintained its outperform rating on shares. Barclays also increased its price target to $500, an 82% increase from its previous benchmark. Analyst Blayne Curtis kept his overweight rating on the stock. "The market is moving quickly and NVDA seems to be the only solution ready to power this wave of LLMs," Curtis said. "The expectation was always that NVDA would see a jump in its Data Center (DC) business, but this was at least a quarter early and extraordinary in magnitude." 'A.I. feeding frenzy' UBS said it's also staying bullish on Nvidia amid the "AI feeding frenzy." "From a valuation perspective, our EPS went up far more than the stock so we believe it is actually now less expensive than it was into earnings which opens up some more room to run," analyst Timothy Arcuri wrote Wednesday. Arcuri raised his price target to $475 from $315 and kept his buy rating on shares. Bank of America's Vivek Arya also reiterated his buy rating on shares and increased his price target to $450 from $340. The analyst said the AI leader is on a path to "$1 trillion and beyond," referring to its market cap, and also noted the current-quarter outlook hike is the largest it has seen in its coverage. Citi also kept its buy rating and hiked its price target to $420 from $363. Morgan Stanley and Wells Fargo also have an overweight rating on shares and price targets of $450. Elsewhere, Baird upgraded shares to outperform and raised its price target to $475 from $300. Analyst Tristan Gerra noted there's "no meaningful competitive threat near term" to Nvidia, adding: "Google's next-gen TPU could be competitive but without likely expanding existing footprint, while other vertical integration initiatives are behind. We see nobody with a full stack solution remotely matching Nvidia's capabilities." Deutsche Bank was less excited than others, however. The bank maintained its hold rating on shares, saying it is waiting for a more attractive entry point following the year-to-date rally and current premium valuation. It raised its price target to $390, which was just 1.5% higher than where shares were trading Thursday morning. Analyst Ross Seymore was also impressed by the chipmaker's earnings. "Just wow," said Seymore. "While NVDA's F1Q report delivered a sizable beat, it paled in comparison to the co's F2Q guidance for an amazing > 50% q/q revenue growth, yielding the single largest outlook 'beat' we can ever recall," he said in a Wednesday note. NVDA 1D mountain Nvidia shares soar — CNBC's Michael Bloom contributed to this report.