Shares of the AI chip leader Nvidia (NASDAQ: NVDA) stood out amidst the tech crowd today, riding high on the positive wave generated by tech giants Meta Platforms (NASDAQ: META) and Amazon (NASDAQ: AMZN). Both of these tech behemoths, who are major customers of Nvidia, experienced substantial surges, reinforcing Nvidia’s position as they make significant moves in the AI arena.
The stellar performance of these companies seemed to trigger an upward spiral in the tech sector, boosting Nvidia as the primary supplier in AI infrastructure; the current euphoria in AI stocks is propelling its ascent.
As of 2:34 p.m. ET, the stock was up 5%.
Image source: Getty Images.
The Growing AI Tide
Despite the absence of any significant company-specific developments, Bank of America raised its price target on Nvidia from $700 to $800, reiterating a buy rating on the stock. Analyst Vivek Arya anticipated the chip stock to surpass estimates by 3% to 5% in the upcoming fourth-quarter earnings report, with guidance also expected to exceed consensus.
However, Nvidia’s gains today can mainly be attributed to the robust performance of Meta and Amazon, particularly their enthusiastic statements regarding AI. Meta disclosed its plans to launch its next large language model, Llama 3, this year, along with a significant procurement goal of 350,000 H100s GPUs. Amazon, on the other hand, emphasized its wide array of compute instances powered by Nvidia chips.
Nvidia’s strong market position is marked by customers essentially acting as its advocates, casting its products as invaluable assets in the current surge of AI.
Potential for Continued Nvidia Momentum
With Nvidia’s stock up 34%, it is increasingly evident that the AI boom is gaining pace. Investors are eagerly anticipating its Q4 earnings report on Feb. 21, with the likelihood of another strong beat pushing the stock even higher, given the soaring profits.
Market consensus points to a staggering 209% surge in revenue, reaching $18.7 billion, and earnings per share of $4.17, up from $0.88. If the company outperforms expectations yet again, a substantial surge in the stock price can be expected.
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