Artificial intelligence chipmaker Nvidia smashed Wall Street's lofty expectations for its fiscal second quarter and guided much higher than views for the current period. NVDA stock initially jumped on the news Thursday but its gains faded as the day progressed.
The Santa Clara, Calif.-based company late Wednesday said it earned an adjusted $2.70 a share on sales of $13.51 billion in the quarter ended July 30. Analysts polled by FactSet had predicted Nvidia earnings of $2.08 a share on sales of $11.19 billion. On a year-over-year basis, Nvidia earnings rocketed 429% while sales soared 101%.
For the current quarter, Nvidia predicted sales of $16 billion, up 170% from the same period last year. Wall Street had called for fiscal third-quarter revenue of $12.59 billion.
"A new computing era has begun," Chief Executive Jensen Huang said in a news release. "Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI."
Nvidia Stock In Record High Territory
Record data-center sales drove Nvidia's quarterly beat. The company's data-center revenue increased 171% from a year ago to $10.32 billion in the second quarter.
At least 27 Wall Street analysts raised their price targets on NVDA stock after the report. And three other firms upgraded Nvidia shares to buy from neutral.
In morning trades on the stock market today, NVDA stock rocketed 6.6% to an all-time high of 502.30. However, NVDA stock was up just a fraction to 471.63 at the close.
Three months ago, Nvidia stock zoomed 24% higher the day after the company posted a monster beat-and-raise report.
NVDA Stock Is On 2 IBD Lists
Year to date through Wednesday's close, NVDA stock has risen 222% thanks to a steady stream of AI news. Nvidia has emerged as a leader in semiconductors, software and services for artificial intelligence applications, including generative AI.
Generative AI can create content — including written articles, images, videos and music — from simple descriptive phrases. Artificial intelligence systems analyze and digest vast amounts of data to create new works. Generative AI also can write computer programming code.
"During the quarter, major cloud service providers announced massive Nvidia H100 AI infrastructures," Huang said. "Leading enterprise IT system and software providers announced partnerships to bring Nvidia AI to every industry. The race is on to adopt generative AI."
NVDA stock is on IBD's Leaderboard and Tech Leaders lists.
Nvidia Report Wows NVDA Stock Analysts
Wall Street analysts gushed about Nvidia's quarterly report in their notes to clients.
"Nvidia's epic print and guide two quarters in a row is simply unprecedented and just getting started," Rosenblatt Securities analyst Hans Mosesmann said. "Nvidia affirms our view of a Mother of All Cycles thesis of the semiconductor industry, underpinned by AI and high-performance computing."
Mosesmann reiterated his buy rating on NVDA stock and raised his price target to 1,100 from 800.
Wedbush Securities analyst Daniel Ives said Nvidia's results were a "home run" driven by "jaw-dropping demand" for its AI chips. Also, the company's guidance and commentary were at a "drop-the-mic" level, he said.
Morgan Stanley analyst Joseph Moore reiterated his overweight rating on NVDA stock and hiked his price target to 630 from 500.
"These are remarkable results, particularly in the context that the company is looking at so much unmet demand," Moore said. "The breadth of AI spending is clearly growing and appears to be durable. The company is executing across silicon, systems, software, and supply chain as the market is inflecting."
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
