Nvidia's blowout forecast adds fresh fuel to AI rally

microsoft, nvidia's blowout forecast adds fresh fuel to ai rally

FILE PHOTO: A view of a Nvidia logo at their headquarters in Taipei, Taiwan May 31, 2023. REUTERS/Ann Wang/File Photo

By Aditya Soni and Gokul Pisharody

(Reuters) - Nvidia rallied 9% on Thursday as its bumper revenue forecast reinforced investor confidence in the AI-driven boom in chip demand, lifting shares across the semiconductor sector.

Expectations were high for Nvidia with its shares trading near record highs in the run-up to earnings. The results also capped a strong quarter for U.S. technology giants, including Microsoft, with AI emerging as a major growth driver.

"Companies are continuing to increase their capital expenditures, particularly Big Tech, to keep up with this revolutionary technology, and Nvidia is by far the biggest beneficiary," said Josh Gilbert, market analyst at eToro.

The company also unveiled a 10-for-one stock split on Wednesday and lifted its quarterly dividend by 150% as demand continues to exceed supply for its high-end chips that power virtually all AI applications, including OpenAI's ChatGPT.

microsoft, nvidia's blowout forecast adds fresh fuel to ai rally

FILE PHOTO: NVIDIA logo is seen near computer motherboard in this illustration taken January 8, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

Already the world's third-most valuable firm, Nvidia was set to add $210 billion to its market value of $2.335 trillion. Its shares rose above $1,000 and a close above that level would mark a major milestone for the company whose stock has rallied more than 90% this year after more than tripling in 2023.

Thursday's jump also followed a prediction from Taiwanese contract chipmaker TSMC, a major supplier to Nvidia, of 10% annual growth in the global semiconductor industry, excluding memory chips.

TSMC's U.S.-listed shares were trading 1.9% higher, while other AI-focused semiconductor stocks such as Advanced Micro Devices, Arm, Broadcom and Super Micro Computer gained between 2.2% and 9.2%.

Analysts cheered remarks from Nvidia executives that its new Blackwell AI chips would start shipping in the current quarter and demand for the processors might exceed supply "well into next year."

CEO Jensen Huang told Reuters that he expected new AI models that are capable of creating video and engaging in human-like voice interactions to spur more orders for Nvidia's processors.

"With competition years behind, we believe Nvidia can comfortably defend and maintain its market share," said Ido Caspi, research analyst at Global X, which invests in Nvidia.

"The ongoing Hopper (Nvidia's current chips) demand should help alleviate investor concerns about customers potentially delaying purchases in anticipation of the Blackwell transition."

Analysts also said the stock split could make Nvidia more appealing to retail investors after a decline in interest this year.

At least 28 of the 58 brokerages raised their price targets on the stock, pushing up the median view to $1,180, according to LSEG data.

Nvidia has a 12-month forward price-to-earnings ratio of 34.7, compared with AMD's 38 and Super Micro Computer's 26.8.

(Reporting by Aditya Soni and Gokul Pisharody in Bengaluru; Additional reporting by Siddarth S and Shubham Batra in Bengaluru, and Danilo Masoni in Milan; Editing by Amanda Cooper, Krishna Chandra Eluri and Anil D'Silva)

OTHER NEWS

19 minutes ago

Wayne Rooney’s ‘extreme’ comments about Trent Alexander-Arnold called into question

19 minutes ago

David Beckham attends King's awards

19 minutes ago

England's starting lineup for Euro 2024 opener against Serbia is confirmed as Trent Alexander-Arnold gets the nod in midfield

19 minutes ago

Holland fans are accused of doing 'blackface' in attempt to dress up as legend Ruud Gullit during Euro 2024 victory over Poland

22 minutes ago

Nick Jonas to star in The Last Five Years on Broadway

24 minutes ago

Watch: Angel Reese gets flagrant foul in collision with Caitlin Clark

26 minutes ago

Biden appears to freeze up, has to be led off stage by Obama at mega-bucks LA fundraiser

26 minutes ago

Video: Chrissy Teigen, Jessica Alba, and Gwen Stefani honor their husbands and dads on Father's Day

26 minutes ago

Video: David Beckham thanks wife Victoria for their 'incredible' family as former footballer leads the Father's Day tributes with Amanda Holden, Amy Dowden and Perrie Edwards

26 minutes ago

Jill Halfpenny says the tragic sudden death of her partner Matt Janes in 2017 finally helped her grieve her father - who also passed away prematurely four decades earlier

26 minutes ago

Minecraft Fan Shares Interesting Concept For a New Pillager Structure

26 minutes ago

COVID disappointment driving Portugal's Cancelo at Euros

26 minutes ago

Italy need to learn killer instinct says Buffon after narrow win

26 minutes ago

Singapore golfer Shannon Tan encouraged by joint-3rd finish ahead of Olympics

26 minutes ago

What large car should you buy in 2024?

26 minutes ago

Netanyahu denounces tactical pauses in Gaza fighting to get in aid

26 minutes ago

Labour ready to launch GB Energy within days if it wins election

28 minutes ago

Russian Forces Claim New Village in Southern Ukraine

28 minutes ago

Disappointing end to Ukraine summit as allies agree to watered-down peace declaration

28 minutes ago

Ukraine keen to show its spirit at Euro 2024 with added motivation to advance

33 minutes ago

Recipe: Father’s Day grilled beef with potato salad and grilled asparagus

34 minutes ago

Conservative grassroots activists want JD Vance as Trump's VP pick: Straw poll shows Ohio senator as the runaway leader ahead of Rubio, Burgum and Scott among Turning Point Action attendees

34 minutes ago

Trump challenges Biden to take the same cognitive test that the former president took in 2018

35 minutes ago

Pliskova fights backs to reach Nottingham Open final

35 minutes ago

Dublin condemn Mayo to preliminary quarter-final after thrilling draw

35 minutes ago

Kevin Campbell obituary

35 minutes ago

Glenn Ryan steps down as Kildare manager following Tailteann Cup exit

35 minutes ago

Briton Draper wins first ATP Tour title in Stuttgart

35 minutes ago

I’ve spent £285,000 to become a single dad of three

35 minutes ago

President says libraries are facing 'censorship' due to 'intimidation by far-right groups'

35 minutes ago

XDefiant Players Sound Off About Their Least Favorite Factions To Play Against

35 minutes ago

Baldur's Gate 3 Player Creates Build Based On God of War's Kratos

36 minutes ago

Christian Eriksen does the impossible yet again in surreal full-circle moment at Euro 2024

39 minutes ago

ITV announces yet another schedule shake-up as flagship shows including Coronation Street and Emmerdale are pulled off-screen for the Euros 2024

39 minutes ago

Three-quarters of voters believe mega-rich Rishi Sunak is out of touch

40 minutes ago

Caitlin Clark Breaks The Internet With Pregame Outfit Before Fever-Sky

40 minutes ago

Amanda Holden posts adorable snap of husband Chris Hughes in sweet Father's Day tribute

40 minutes ago

'When he bats, dressing room is absolutely calm': Harbhajan Singh on India's biggest match-winner at T20 World Cup

40 minutes ago

Romania will fight for every metre on pitch against Ukraine, coach says

41 minutes ago

New 'Washington Post' chiefs can’t shake their past in London