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Updated at 10:29 AM EST
Nvidia shares rose in trading on Friday as investors looked ahead to the AI chipmaker’s crucial second-quarter report, and a top Wall Street analyst issued a bullish call on its broader impact on the tech market.
Nvidia (NVDA program) Apple, which will report second-quarter earnings next week, has rebounded strongly from its lows at the start of the month, adding more than $600 billion to its market value since Profitable Yen Trade Stirs Up Unrest which rocked global stock markets on August 5.
The stock’s momentum could be a key factor in boosting broader market sentiment heading into the fall as well, as investors question the sincerity of AI-related investment spending and weigh the impact of the first weak quarterly performance for the Big 7 tech stocks in at least two years.
In fact, Wedbush analyst Dan Ives says Nvidia’s earnings are likely to highlight “the most important week for the stock market in years,” since the tech giant has “the best vantage point and vantage point to discuss overall enterprise AI demand and the desire for Nvidia’s AI chips in the future.”
With these lofty expectations cemented, fellow Wedbush analyst Matt Bryson added $18 to his price target on Nvidia stock, bringing it to $138 per share, while maintaining his “overweight” rating.
NVIDIA’s Blackwell Chip Revenue in the Spotlight
Bryson said he expects “stronger second-quarter results and stronger third-quarter guidance” from the chipmaker next week. He expects net income for the three months ended July to be 67 cents a share on revenue of $30 billion.
Wall Street consensus forecasts call for net income of 64 cents per share, up 137% from a year ago, with revenue more than doubling to $28.55 billion.
Nvidia told investors in May that current-quarter revenue would rise to about $28 billion, at the time the stronger-than-expected estimate allayed investor concerns about delays in H100 chip orders tied to the launch of new Blackwell processors.
Related: Goldman Sachs Analyst Revisits Nvidia Stock Price Target Ahead of Earnings
Investors will be focusing on reports that deliveries of Blackwell’s newly launched line of processors, which are supposed to be faster, cheaper and more efficient than the previous H100 Hopper processors, may be delayed due to design flaws.
Analysts had expected Blackwell to start contributing to Nvidia’s revenue growth in the third quarter and find its way into global customer data centers by the final three months of the year.
Giant corporations are willing to spend huge amounts of money on infrastructure.
That demand, combined with Nvidia’s dominant market share, is expected to push the group’s data center revenue to $150 billion next year, largely fueled by the launch of Blackwell this year.
Big data providers, the major providers of large data centers and cloud services, are expected to spend about $500 billion over the next two years building out their own big data infrastructure, according to Barclays estimates.
The goal is to leverage their massive data sets to boost sales of everything from drive-thru dining to more sophisticated pharmaceutical tests.
However, some analysts have also begun to question the pace of AI spending by giants like Microsoft. (Microsoft) Meta platforms (Meta) Amazon (Amazon) and Google’s parent company, Alphabet. (Google) The resulting demand for advanced chips and processors produced by Nvidia.
Related: Big Names Exit Nvidia Stock as AI Giant Stumbles Ahead of Earnings
Nvidia’s near-term outlook will be crucial to the broader direction of tech stocks, says Wedbush’s Ives, who estimates that “for every dollar spent on a GPU chip from Nvidia, there’s an $8 to $10 multiple across the sector.”
More AI Stocks:
- Analyst Revisits Microsoft Stock Price Target After AI Reports Change
- Analyst Resets Nvidia Stock Price Target Ahead of Earnings
- Analysts Revise Palo Alto Networks Stock Price Targets After Earnings
“The stage is set for a tech rally through the end of the year and into 2025,” Ives said. “With the Fed poised to begin its rate-cutting cycle, a soft landing for the macro economy remains the path, and tech spending on AI remains a generational spending cycle that is just beginning to hit the shores of the tech sector.”
Nvidia shares rose 4.7% in early trading Friday to trade at $129.48, a move that would extend the stock’s six-month gains to about 65%.
Related: Veteran Fund Manager Sees a World of Pain Coming for Stocks
