Published on May 25, 2023

Nvidia's stock experienced a significant surge following what analysts are calling "guidance for the ages." Here's what Wall Street is saying about it.

Nvidia (NVDA) has once again solidified its position as Wall Street's favorite stock after an impressive earnings call fueled by AI advancements and an outlook that exceeded even the most bullish analysts' predictions.

On Thursday, Nvidia's shares skyrocketed by 27% in trading as the company's results outperformed analyst estimates. The stock was the most actively traded on the Yahoo Finance platform, with rival chip players like AMD (AMD) and Intel (INTC) following closely behind.

If Nvidia's gains hold, the company's market value would increase by over $200 billion, marking the largest one-day rise in history. Currently, Apple holds the record for the biggest one-day rise with a $191 billion increase in November 2022.

What truly caught investors' attention was Nvidia's outlook.

The company expects second-quarter revenue to reach approximately $11 billion, with a margin of error of plus or minus 2%. This figure far exceeded Wall Street's expectation of $7.2 billion.

During the earnings call, Nvidia's founder and CEO, Jensen Huang, attributed the positive outlook to a fundamental shift toward accelerated computing. This shift has resulted in a high demand for Nvidia's chips, which power generative AI applications.

Huang stated, "We're seeing incredible orders to retool the world's data centers. And so I think you're seeing the beginning of a 10-year transition to basically recycle or reclaim the world's data centers and build it out as accelerated computing... The workload is going to be predominantly generative AI."

Here's what Wall Street analysts had to say about Nvidia's impressive quarter and outlook:

Ruben Roy, Stifel (Hold rating; $370 price target, up from $300): Roy highlighted Nvidia's strong momentum, beating consensus expectations in the first quarter. He emphasized Nvidia's position in AI-infrastructure wallet share and predicted continued growth in the data center segment. However, questions regarding the near-term supply environment may persist.

Tristan Gerra, Baird (Outperform rating, upgrade from Hold; $475 price target, up from $300): Gerra mentioned raising estimates above consensus and adding a Fresh Pick designation to Nvidia in March. He emphasized the ongoing momentum in AI-related orders and predicted the potential for annualized earnings of $10 within the next 2-3 quarters.

Atif Malik, Citi (Buy rating; $420 price target, up from $353): Malik highlighted the significant upside related to generative AI, which exceeded expectations. He noted Nvidia's expectation of doubling data center sales in the July quarter due to growing demand for AI from various sectors. Malik emphasized that AI adoption remains in its early stages.

Dan Ives, Wedbush (no rating/price target): Ives expressed that Nvidia's performance is a strong indicator of underlying AI demand in the hyperscale/cloud and enterprise markets. He emphasized Nvidia's position at the core of the AI revolution and applauded the company for delivering "guidance for the ages."

Ross Seymore, Deutsche Bank (Hold rating; $390 price target, up from $170): Seymore raised concerns about the sustainability of Nvidia's growth following the massive beat and share price surge. However, he acknowledged the secular drivers of growth, such as AI and data center accelerators, and Nvidia's leadership in these areas. Seymore raised the revenue and EPS estimates for 2024 and recommended investors enjoy the ride.

Overall, analysts were highly impressed by Nvidia's earnings and outlook, recognizing the company's dominant position in the AI market and anticipating continued growth in the coming quarters.