Nvidia was rising Monday after the chip maker’s stock hit a series of new records last week. CEO Jensen Huang is predicting spending on data centers will double in the next few years and Wall Street expects Nvidia to benefit.
Nvidia
shares were up 0.9% at $728.04 in early trading. The stock finished up 3.6% at $721.33 on Friday, a record closing high.
The company’s stock has more than tripled over the last 12 months, with the latest round of earnings from technology companies reinforcing the rise of artificial-intelligence technology. Nvidia’s graphics-processing units are the favored choice for carrying out the accelerated computing that underpins AI systems.
Huang said at the World Government Summit in Dubai on Monday that he expects the shift to accelerated computing to continue and that each country will need to build out its own AI infrastructure.
“There’s about $1 trillion worth of installed base of data centers around the world. And over the course of the next four or five years we’ll have $2 trillion worth of data centers that will be powering software around the world, and all of it’s going to be accelerated,” Huang said in an interview at the summit.
It’s a message that Wall Street is backing. Melius Research analyst Ben Reitzes raised his target price on the stock to $920 from $750 in a research note on Monday, based on a price-to-earnings multiple of 30 times Nvidia’s forecast earnings for its fiscal year 2027. The target implies a 26% gain from current levels. Reitzes maintained a Buy rating on Nvidia stock.
“AI is still in its infancy and the leader is embarking on another new product cycle despite some new competition. Revenue streams from Nvidia’s AI Enterprise software and networking initiatives are still nascent and there are other new initiatives that are likely coming at its GTC event in March,” Reitzes wrote in a research note.
Reitzes backs Nvidia to reach revenue of $97.9 billion and earnings per share of $21.92 in its current fiscal year, which runs to January 2025.
Nvidia is expected to report revenue of $59.0 billion and earnings per share of $12.36 for its recently ended fiscal year, according to FactSet. Nvidia will report its fourth quarter and yearly earnings on Feb. 21.
Nvidia stock was climbing along with other chip makers.
Advanced Micro Devices
stock rose 1.1%, and shares of
Intel
were up 2.0%.
Nvidia shares have risen 32% over the last month through to Friday’s close. That compares with a 5.1% gain for the
S&P 500,
and a 6.8% gain for the
Nasdaq Composite
over the same period.
Write to Adam Clark at [email protected]
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