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Nvidia (NASDAQ:NVDA) witnessed a significant surge in its price target as Susquehanna revised its forecast on Wednesday, just days ahead of the release of its fourth-quarter earnings report scheduled for Feb. 21.
Pre-Earnings Boost
The company’s shares soared by nearly 1.5% in premarket trading following the favorable projection.
“We expect better results/guidance as checks around [data center] GPUs (long LTs and high aftermarket pricing) are solid,” stated analyst Christopher Rolland, who substantially raised the target price to $850 from $625. “For Data Center (now [more than] 80% of revenue), AI demand remains strong, helped by better hyperscale capex guidance and recent commentary from Meta and Tesla suggesting continued strong GPU purchases.”
Rolland further added, “While some worried about an air pocket ahead of B100, we think this seems increasingly less likely, although we note the possibility of slowing growth in 3Q in front of this year-end ramp.”
Anticipated Earnings
Market analysts estimate that Nvidia’s fourth-quarter earnings will amount to $4.56 per share on $20.33B in revenue.
“The ramp of Nvidia’s H100 GPUs are believed to have gone to the company’s largest customers, though there is still a ‘long-tail list’ of customers that have not yet received ample supply — including enterprise and governments — providing confidence about the guidance for the first-quarter,” Rolland said.
Supply and Demand Dynamics
“We believe supply is still somewhat of a gating issue, but less so, as evidenced by the +53% quarter-over-quarter rise in purchase obligations last quarter and CFO [Colette] Kress’s continued confidence that supply will increase each quarter through the year,” he added.
Diverse Market Segments
However, the outlook for other segments may vary. The gaming segment is expected to perform “in-line to slightly better,” while automotive could face challenges due to weaker Chinese and global electric vehicle demand, according to Rolland.
Business Partnerships
Separately, news emerged that Nvidia has signed a deal with Japanese tech conglomerate SoftBank (OTCPK:SFTBY) to establish an industry group for global standards for AI processing using mobile network base stations.
Previous Endeavors
Nvidia’s attempt to acquire Arm Holdings (ARM) from SoftBank nearly two years ago was stymied by industry and regulatory pressure.
