Nvidia shares pop 10% to record high after forecast signals unwavering demand for AI chips

Nvidia shares reached a record high, surging over 10% after reporting strong fiscal first-quarter earnings and revenue that surpassed expectations. The demand for its AI chips remains robust, with data center revenue up by 427%. The company also announced a 10-for-1 stock split and issued a positive revenue forecast for the current quarter, projecting $28 billion against an estimated $26.61 billion.

Following the earnings report, Wall Street analysts have turned more optimistic. Bernstein and Jefferies raised their price targets for Nvidia, citing the potential of new AI graphics processors and overall strong financial performance. Nvidia's net income showed significant growth, jumping to $14.88 billion from $2.04 billion in the year-ago quarter. Shares hit an all-time high of $1,051.96, reflecting a year-to-date increase of about 111%.

Strong Financial Performance and Guidance: Nvidia's stock price soared to an all-time high largely due to its impressive financial performance in the fiscal first quarter3. The company reported first-quarter revenue of $26.04 billion, surpassing the LSEG estimate of $24.65 billion. This indicates a robust demand for its products, especially its artificial intelligence chips, which saw data center revenue grow by 427% during the quarter. Additionally, Nvidia provided strong future guidance, projecting $28 billion in revenue for the upcoming quarter, which also exceeded the LSEG estimate of $26.61 billion.

Analyst Confidence and Stock Split Announcement: The surge in Nvidia's stock price was further fueled by increased confidence from Wall Street analysts following the earnings report1. Analysts became more bullish, with firms like Bernstein and Jefferies raising their price targets significantly due to Nvidia's strong earnings and the potential of new AI graphics processors. Moreover, the announcement of a 10-for-1 stock split, effective June 10, likely made the stock more accessible to a broader range of investors, contributing to the price increase.

Overall Market Sentiment: The overall market sentiment towards Nvidia was extremely positive, reflecting the company's strategic position in the rapidly growing AI market and its ability to consistently deliver financial results that beat expectations. This sentiment, combined with the tangible results and optimistic future projections, played a crucial role in driving the stock to record highs.