Nvidia ignites chip stock rally as forecast shows AI boom is intact
Nvidia has calmed investor anxieties regarding the AI surge, forecasting a remarkable seventy percent increase in revenue for the upcoming fiscal year. This optimistic outlook highlights sustained investments in artificial intelligence technology....
By Reuters |
Agencies
Nvidia ignited a chip-stock rally on Thursday with a rare long-term revenue projection that did what its recent quarterly beats could not - ease investor fears that the AI boom is fading.
Shares of the chipmaker jumped 6.8%, putting the chipmaker on track to add about $295.7 billion in market value and marking its best single-day performance since June 1, if gains hold.
After surging more than 1,000% over three years to become the world's most valuable company, Nvidia has lagged rival chip stocks in 2026 with a gain of just 12% due to fears over Big Tech's data-center spending and its own role in inflating AI valuations by backing some firms that are its customers.
Efforts by customers, including OpenAI, to develop in-house chips that serve as an alternative to Nvidia's costly and supply-constrained processors have added to the pressure.
To ease the concerns, Nvidia on Wednesday forecast a 70% jump in next fiscal year's revenue, an unusual move by a company that typically issues quarterly projections only.
It also beat revenue and profit expectations for the second quarter.
The forecast confirmed the "AI build-out will continue at full speed and Nvidia will continue to put a notable part of this spending in its pockets," Ipek Ozkardeskaya, analyst at Swissquote, said.
"It's impossible for investors to turn their backs on this company: it is growing fast, and it is incredibly profitable. This is not pricing in a dream; this is reality."
Other AI-linked chip stocks also rose in a nearly $150 billion rally, with Intel, Micron, Broadcom and U.S.-listed shares of South Korea's SK Hynix up between 1.3% and 3.5%, after technology stocks gained on the Asian and European bourses.
Even AI cloud computing companies such as CoreWeave and Nebius, which are backed by Nvidia and increasingly seen as important to its business, rose between 2% and 4.5%.
At least 16 brokerages raised their price targets on Nvidia's stock as the results showed strong demand for its next-generation Rubin AI processors, according to LSEG data.
Still, Nvidia trades at a lower multiple compared with rivals as analysts' expectations for its earnings have risen faster than the company's share price. It has a forward price-to-earnings ratio of 17.9, well below Advanced Micro Devices' 37.2 times and Intel's 46.2 times.
Shares of the chipmaker jumped 6.8%, putting the chipmaker on track to add about $295.7 billion in market value and marking its best single-day performance since June 1, if gains hold.
After surging more than 1,000% over three years to become the world's most valuable company, Nvidia has lagged rival chip stocks in 2026 with a gain of just 12% due to fears over Big Tech's data-center spending and its own role in inflating AI valuations by backing some firms that are its customers.
Efforts by customers, including OpenAI, to develop in-house chips that serve as an alternative to Nvidia's costly and supply-constrained processors have added to the pressure.
To ease the concerns, Nvidia on Wednesday forecast a 70% jump in next fiscal year's revenue, an unusual move by a company that typically issues quarterly projections only.
It also beat revenue and profit expectations for the second quarter.
ADVERTISEMENT
The forecast confirmed the "AI build-out will continue at full speed and Nvidia will continue to put a notable part of this spending in its pockets," Ipek Ozkardeskaya, analyst at Swissquote, said.
"It's impossible for investors to turn their backs on this company: it is growing fast, and it is incredibly profitable. This is not pricing in a dream; this is reality."
Other AI-linked chip stocks also rose in a nearly $150 billion rally, with Intel, Micron, Broadcom and U.S.-listed shares of South Korea's SK Hynix up between 1.3% and 3.5%, after technology stocks gained on the Asian and European bourses.
Even AI cloud computing companies such as CoreWeave and Nebius, which are backed by Nvidia and increasingly seen as important to its business, rose between 2% and 4.5%.
ADVERTISEMENT
At least 16 brokerages raised their price targets on Nvidia's stock as the results showed strong demand for its next-generation Rubin AI processors, according to LSEG data.
Still, Nvidia trades at a lower multiple compared with rivals as analysts' expectations for its earnings have risen faster than the company's share price. It has a forward price-to-earnings ratio of 17.9, well below Advanced Micro Devices' 37.2 times and Intel's 46.2 times.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
