Technology giant NVIDIA Corporation (NASDAQ: NVDA) beat revenue and earnings per share estimates from analysts in its fourth quarter financial results, which they reported Wednesday.
Here is what analysts are saying about the report and the future of Nvidia.
The Nvidia Analysts:
- Goldman Sachs analyst Toshiya Hari has a Buy rating and raises the price target from $800 to $875.
- Oppenheimer analyst Rich Schafer has an Outperform rating and a price target of $850.
- Wedbush analyst Matt Bryson has an Outperform rating and raises the price target from $800 to $850.
- Needham analyst Quinn Bolton has a Buy rating and raises the price target from $600 to $850.
- KeyBanc analyst John Vinh has an Overweight rating and raises the price target from $740 to $1,100.
- JPMorgan analyst Harlan Sur has an Overweight rating and raises the price target from $650 to $850.
- Bank of America analyst Vivek Arya has a Buy rating and raises the price target from $800 to $925.
"Nvidia delivered against what was seemingly a very high bar with Data Center once again serving as the key growth driver," Hari added.
The analyst said new product introductions like the H200, Spectrum-X and B100 can help increase demand from existing and new customers.
"We expect not only sustained growth in Gen AI infrastructure spending by the large CSPs and consumer internet companies, but also increased development and adoption of AI across enterprise customers representing various industry verticals and, increasingly, sovereign states."
Oppenheimer on Nvidia: The technology giant exceeded lofty expectations in the fourth quarter, Schafer said.
"We see sovereign AI builds as one of the latest multibillion-dollar opportunities fueling AI adoption and growth," Schafer said.
The analyst said supply is improving for Nvidia, but constraints could continue to persist for the company.
Schafer also highlighted gross margins from Nvidia that were up in the quarter and are likely to remain "elevated" in the first quarter before settling at around 75% in the later part of calendar year 2024.
"NVDA's entrenched DC AI ecosystem is core to GenAI adoption."
Wedbush on Nvidia: The company is still "stepping on the AI accelerator," Bryson said in an investor note.
"Guidance, in turn, implies solid growth off the higher number again fueled by the velocity of NVDA's datacenter business," Bryson said.
The analyst said the concern is how long the sales momentum can continue for Nvidia.
"One potential point of caution is management's indication that supply is improving in contrast with recent quarters where management explicitly talked to demand exceeding product availability."
Needham on Nvidia: Demand remains "well ahead" of supply for Nvidia, Bolton notes.
The analyst said the beat and raise from Nvidia came as the company saw weakness from China during the quarter.
"NVDA sees two industry-wide transactions driving the company still supply-constrained demand: 1) the move from general to accelerated computing and 2) generative AI is enabling an entirely new industry," Bolton said.
The analyst said the company is "walking a fine line between supply and demand," but concerns are less worrisome in the near-term.
Bolton said China represented mid-single digits of Data Center revenue in the fourth quarter, versus a previous range of 20% to 25% quarterly. The outlook for China could improve, the analyst said.
"While we don't expect any export licenses to be granted near term, we believe China demand may start to recover post F1Q, providing another driver for growth in F2H25."
KeyBanc on Nvidia: Strong demand for generative AI products helped Nvidia's fourth quarter results, Vinh said.
The analyst said initial demand for new Nvidia products is exceeding supply.
"We're encouraged by these impressive results," Vinh said.
Vinh said Nvidia has started shipping alternative GPUs that are below the export threshold to China, which could help keep the region in the mid-single digits for Data Center or improve from the fourth quarter.
"Nvidia Corporation is one of the global leaders in advanced graphics processing technology."
The analyst said diversification into new markets could help "drive meaningful growth over the next few years."
JPMorgan on Nvidia: Demand continues to exceed supply for Nvidia, which provided strong results in the fourth quarter, Sur said.
"The team noted that demand will continue to outstrip supply through CY24, allaying fears of an inventory build/correction into CY25+," Sur said.
The analyst said the transition to accelerated computing, generative AI applications and build-out of sovereign AI is helping Nvidia with growth and future demand.
"We estimate the team can drive 10% to 15% Q/Q growth in the Data Center business for the April quarter."
Sur said Nvidia "continues to execute across all segments."
"We anticipate significant upside in the shares, driving our Overweight rating."
Bank of America on Nvidia: Items like compute and networking growth, AI customer diversity and robust cash generation are positives for Nvidia, Arya said.
The risks for Nvidia are growing competition, China and gross margins moderating.
"Perhaps the most important new datapoint in NVDA's earnings call was that AI interference contributed nearly 40% of AI computing mix in FY24," Arya said.
The analyst said the company has "de-risked" from China, but its future growth rate could be impacted if it sees weakened international demand or additional shipment restrictions.
NVDA Price Action: Nvidia shares are up 15% to $777.90 on Thursday, hitting new 52-week highs.