Nvidia is one stock that has immensely benefitted from the boom in artificial intelligence. The chipmaker’s data centre technology has enabled almost every industry to move their data management to, what the company’s CEO Jensen Huang calls, “AI factories.”
Setting the gold standard for the industry, Nvidia's GPUs have brought significant acceleration to data processing, the backbone of AI training and inference. As of June 26, 2024, the chipmaker’s share price had risen 210.34% over the past 12 months and 161.76% YTD.
Nvidia Hits Benchmark in Q1 2024
Nvidia's Q1 earnings surpassed analyst expectations with an earnings per share (EPS) jump of 461% and a revenue climb of 262%. Following the announcement, the company’s stock rose 9.3% and breached $1,000 for the first time. The Q1 report pushed Nvidia’s market capitalisation to over $2.5 trillion.
After smashing all forecasts, Nvidia raised its quarterly cash dividend by 150% and conducted a 10-to-1 forward stock split, which came into effect on June 7, 2024. The increase equates to $0.01 per share (post-split). In addition, the chipmaker raised its Q2 2025 revenue outlook to $28 billion, with a margin of 2%.
JPMorgan Raises Nvidia's Price Target to $1,150
The AI revolution has impacted every single industry. Nvidia is the go-to company for AI chips to build data centres. In addition, the company’s networking wing has immensely benefitted from advances in AI technology. The beat earnings report also lent support to the shares of other AI players, such as Broadcom (AVGO), Advanced Micro Devices (AMD), Taiwan Semiconductor (TSM) and Microsoft (MSFT). Being a big component in major indices, Nvidia's report drove S&P 500 futures 0.7% higher, while Nasdaq 100 futures gained 1.1%. The exceptional performance, impressive pricing power and industry dominance of the chipmaker drove its non-GAAP EPS to $6.12 for Q1, exceeding the estimate of $5.58.
Heavy demand from numerous sectors, such as the data sector, gaming and AI PC, visualisation, automotive and robotics, is driving Nvidia’s growth. The AI industry bellwether highlighted strong demand for AI chips, with 45% of its sales coming from large cloud providers. “They want to put our GPUs (graphics processing units) to work right now and start making money and start saving money,” said Huang about the demand and transition to their next-generation AI chips.
Massive Potential Growth Ahead
There is a strong demand for the company's Hopper Chips (current-generation AI chips), and the announcement of next-generation chips, ‘Blackwell’, has intensified the expectations from the company to surpass more Wall Street forecasts in 2025.
Snowballing chip demand from tech giants, such as Apple and Meta Platforms, to expand their AI capabilities, is set to drive further growth for Nvidia. The company’s market share in the AI-GPU segment grew to 97% in 2023 from 96% in 2022 and is expected to grow further with upcoming launches.
Nvidia plans to launch Blackwell chips in the latter part of Q3 2024. In early 2025, the company plans to launch the GB200 Superchips, which could cost up to $60,000 to $70,000 per unit. This, accompanied by the supply gap for next-generation products, will push revenues higher, despite higher costs. The new chips are expected to drive revenue from data centres above $200 billion.
How to Support Your Traders
Nvidia registered 61% growth in annual revenue in February 2022. The founder emphasised extraordinary demand amid the AI euphoria. The company’s stock has been rising ever since. Traders with access to the right information at the right time can capture emerging market opportunities. The key to bolstering trading activity is to make the necessary research available for traders to make informed decisions. Augment analyst research with market sentiment and alternative data to enhance trader experiences. More importantly, in the age of hyper-personalisation, it is paramount to deliver the information to every trader in a manner they find useful and can act on it.
For this, you will need to employ cutting-edge technology solutions to power your trading platform to offer exceptional customer experience. Offering trading signals is no longer enough. Often traders want to understand the associated risks, the relevance of an opportunity to their portfolio’s distribution, and the accuracy level of a speculation. This is where you need a partner with sophisticated technology solutions and mechanisms to deliver targeted trader education, according to their experience levels and trading preferences.
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