Nvidia Corp (NVDA) stock took a slight dip on Tuesday, with investors engaging in profit-taking after a remarkable 12-month period that saw the stock soar by 193%. This surge was fueled by the widespread excitement surrounding artificial intelligence (AI), a field where Nvidia has emerged as a leading player. Despite the dip, analysts remain optimistic about the company’s future, citing its dominance in the AI market and promising growth prospects.
Analysts like Wedbush Securities’ Matt Bryson and Oppenheimer’s Rick Schafer have consistently hailed Nvidia as a crucial player in the AI revolution. While AI remains a core focus, Nvidia continues to innovate in the gaming technology sector. The company recently unveiled its first digital human technology small language model, Nemotron-4 4B Instruct, designed to enhance character interactions in the upcoming multiplayer mech game Mecha BREAK, developed by Kingsoft Cloud Holdings KC’s subsidiary, Amazing Seasun Games. This technology is optimized for GeForce RTX AI PCs and laptops, facilitating the integration of advanced digital human technology into next-generation games.
Furthermore, Nvidia has made significant strides in the field of weather forecasting with its generative AI weather model, StormCast. This model promises to revolutionize short-range weather forecasting by providing more accurate predictions of extreme weather events, such as flash floods and tornado outbreaks, down to the kilometer scale, as reported by Axios. StormCast’s ability to operate at the mesoscale level allows it to resolve smaller-scale weather systems and incorporate complex atmospheric physics, enhancing its predictive capabilities.
Analyst Oppenheimer’s Rick Schafer reiterated an Outperform rating on Nvidia, setting a price target of $150. He highlighted the company’s impressive gross and operating margin profile, attributing it to Nvidia’s dominant position as the leading scale play in the AI proliferation. Schafer emphasized the sustained structural growth of Data Center AI, driven by increased accelerator attachment. He also highlighted Nvidia’s entrenched DC AI ecosystem as a crucial factor in the adoption of GenAI.
Looking ahead, Schafer expects upside for Nvidia’s second-quarter results and third-quarter outlook, fueled by sustained demand from cloud service providers (CSPs) and enterprises for AI solutions. While tight supply constraints have normalized, the analyst anticipates a ramp-up in supply of advanced packaging capacity, leading to a low-volume introduction of the B100 in the fourth quarter and a significant increase in production in the first quarter. To address the interim demand, Nvidia’s Hopper chips are expected to play a key role. The company has ambitious plans for the future, with Blackwell Ultra projected to launch by late fiscal 2025, Ruben+Vera by fiscal 2026, and Ruben Ultra by fiscal 2027.
Nvidia’s unique end-to-end software connectivity accelerator platform, further enhanced by its GB200 NVL36 and GB200 NVL72 racks, continues to differentiate the company from its competitors. Schafer forecasts second-quarter net sales of $28.04 billion and earnings per share of $0.62.
Despite the slight dip in trading, NVDA stock closed at $128.08 on Tuesday, a 1.50% decrease.
