Nvidia
stock was rising early on Wednesday as the tech sector recovers from the shock of a higher-than-expected inflation reading. The chip maker is heading into the final stretch ahead of its earnings report and expectations are being pushed higher.
Nvidia
shares rose as high as $742.36 for a gain of 2.9%, meaning its market capitalization at least briefly outstripped those of
Alphabet
and
Amazon.com
to make it the third-largest U.S. company, according to Dow Jones Market Data. Only
Apple
and
Microsoft
are larger.
Nvidia stock fell 0.2% at $721.28 on Tuesday, after closing at a record the previous day. Tech stocks in general came under pressure because inflation data for January made it appear more likely that the Federal Reserve will hold off for longer in cutting interest rates.
Nvidia’s market value at the close on Tuesday was $1.78 trillion, compared with $1.75 trillion for Amazon, according to Dow Jones Market Data. That was the first time Nvidia had closed with a larger market cap than Amazon since April 2002.
Attention is now on Nvidia’s earnings report on Feb. 21. Stockholders are now in the habit of expecting the chip maker to blow past expectations, but that also means it faces a higher bar to impress.
“We expect another strong print but think investors have largely priced in this near-term upside, with size of the beat the real debatable point,” Susquehanna analyst Christopher Rolland wrote in a research note on Wednesday.
Rolland is backing Nvidia to impress, raising his target price on the stock to $850 from $625, and keeping a Positive rating. However, he said the company will likely need to beat fourth-quarter revenue expectations by at least $1.5 billion to get an immediate positive reaction.
Nvidia is expected to report earnings per share of $4.56 from revenue of $20.2 billion for the quarter, according to a FactSet poll of analysts’ estimates.
UBS analyst Timothy Arcuri is expecting Nvidia to sail over that bar and report revenue of around $23 billion. He noted that Nvidia looks to be solving its supply issues, allowing the company to deliver its graphics processing units quicker.
“Demand for AI compute capacity is still so strong, in the near term, we think this just points to significant upside potential to shipments/revenue,” Arcuri wrote in a research note on Tuesday.
The UBS analyst raised his target price on Nvidia to $850 from $580, and kept a Buy rating on the stock. The new target is based on a price-to-earnings multiple of 25 times Nvidia’s forecast earnings per share for 2025.
Nvidia stock was gaining along with other chip makers on Wednesday.
Advanced Micro Devices
stock was up 2.5% in early trading and
Intel
stock had risen 2.2%.
Nvidia shares have risen 46% over the past month through to Tuesday’s close. That compares with a 3.8% rise for the
S&P 500
index and a 4.3% gain in the
Nasdaq Composite Index.
Write to Adam Clark at [email protected]
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