Here’s what Wall Street is saying about Nvidia’s ‘whopper’ of an earnings report

It’s moving day yet again for top AI play Nvidia. Shares of the tech beast are up 8% in pre-market trading on Thursday after another monster quarter and outlook on the back of strong demand for new AI chips. The stock is Yahoo Finance’s number one trending ticker. “Nvidia served up a whopper,” said Stifel analyst Brian Chin in a client note. That’s about on the mark. Net sales surged 101% from the prior year to $13.51 billion. Earnings per share improved a staggering 429% year on year. Similar to its mind-blowing May outlook that rocked Wall Street, Nvidia served up another eye-popping forecast that is sending analyst estimates sharply higher. Nvidia’s October quarter sales outlook of $16 billion was significantly above consensus forecasts for $12.6 billion. Chatter on the Street is that it was materially above elevated buy-side whisper numbers, too. “The world has something along the lines of about a trillion dollars’ worth of data centers installed in the cloud and enterprise and otherwise,” Nvidia CEO Jensen Huang said on the earnings call. “And that trillion dollars of data centers is in the process of transitioning into accelerated computing and generative AI. We’re seeing two simultaneous platform shifts at the same time.” Here’s what Wall Street is saying about Nvidia’s latest quarter:

• Wedbush analyst Dan Ives: “The Street was awaiting on pins and needles the quarter/guidance from Nvidia after the bell and the Godfather of AI Jensen and Nvidia delivered in homerun fashion. The entire tech sector and overall market was waiting for Nvidia with this being the purest and best barometer for AI demand and the results/guidance were a ‘drop the mic’ moment in our opinion that will have a ripple impact for the tech space for the rest of the year. As my collegue Matt Bryson and the rest of the Wedbush tech team has continued to discuss again and again over the last six months this is an unprecedented demand that we are seeing before our eyes in the AI Gold Rush. The October quarter guidance of $16 billion was well above $12.6 billion estimates and quickly rising whisper numbers on the Street and will be fuel in the engine to ignite a tech rally we see continuing into the rest of the year despite the recent pullback and Fed jitters (Jackson Hole meeting) in the air.”

• Citi analyst Atif Malik: “We believe management did a good job addressing the three key topics we highlighted: AI demand, supply, and China. Management sees “tremendous” broad-based AI demand across CSPs, consumer/internet, and enterprises with visibility extending into next year. Supply is expected to grow through the year into next year with some products like L40S GPU not requiring advanced packaging. China remained stable at 20-25% of data center sales as US led the data center growth. We hike our FY24/25/26 EPS by 42%/37%/23% and raise target price to $630 on consistent 35x P/E revised CY25 EPS of $18. Maintain Buy.”
• Baird analyst Tristan Gerra: “The convergence of accelerated computing and generative AI is driving very significant growth for Nvidia’s data center products. Strength is broad based, while Grace should add another significant growth layer starting next year and likely not fully priced in. Significant increases in CoWoS capacity give us confidence in a doubling of DC revenue for next year, while we expect strength in generative AI demand to be ongoing for many quarters. Data center densification trend will continue likely redirecting away from traditional DC spending. Reiterating Bullish Fresh Pick, Outperform-rated.”
• Stifel analyst Ruben Roy: “Following another exceptional quarter, significantly stronger-than-expected outlook, and extended demand visibility, we upgrade our rating on NVDA shares to Buy. While we have long viewed NVDA as the primary beneficiary of the increasing investments being made on large language models/generative AI training clusters, we underestimated the opportunity related to the potential shift of $1 trillion of installed data center infrastructure from general purpose compute to accelerated compute architectures. As data center compute demand continues to expand, longer-term data center capacity growth is increasingly constrained by power limitations and the slowing of Moore’s Law. The shift from x86 based CPU infrastructure to accelerated compute (NVDA primarily today) is underway, and NVDA’s recent performance and outlook (100%+ y/y revenue growth over the next few quarters) illustrates that the pivot is gathering speed.”