Nvidia: The start of the next bull run (NASDAQ:NVDA)

Investment thesis

Nvidia company (Nasdaq: NVDA) continues its impressive performance, approaching our previous target of $1,165, underscoring its strong foothold in the booming AI and gaming industries. Our reassessment of Nvidia stock, driven by… Continuous technical analysis provides new price forecasts, reflecting the company’s continued upward momentum and its strong market position.

We maintain a Strong Buy rating on NVDA, with updated price targets to reflect increased investor enthusiasm and strategic progress in key technology sectors. This dynamic outlook prompts regular updates to adapt to Nvidia’s evolving market impact and investment potential.

Another quarter of earnings and strong guidance underscore why Nvidia is the center of attention amid the AI ​​boom. After rising more than 500% over the past year and dwarfing the S&P 500 (SP500)’s 36% gain, the stock remains a favorite. In the booming semiconductor sector despite boasting an outstanding valuation.

The company’s profits and cash flows continue to break records despite growing concerns that demand for AI chips will soon wane. CEO Jensen Huang, who insists the market is very strong, emphasizes the company’s long-term prospects and growth metrics.

The stock broke through the psychological level of $1,000 a share as the CEO emphasized that more people and companies want to deploy powerful Nvidia chips in data centers to start making and saving money. True to the CEO’s words, Nvidia beat all estimates after delivering another record first quarter.

NVDA Targets $2,130 Pre-Split Amid Increasing Momentum and Upcoming 10:1 Split!

Nvidia stock is currently trading at $1,065 with strong upward momentum. As an important note, the stock split announced for June (10:1) will significantly impact the affordability (positive) and average trading volume of the stock. Identifying trend lines during recent volatility (with red and green circles indicating breakouts) provides optimism Target price is $2,130 ($213 after split) by the end of 2024. Likewise, the average price target is $1,470 ($147 after split).

The downbeat price target was $735 ($73.5 after the split). These price targets are projected at Fibonacci retracement (pessimistic) and extension (optimistic and intermediate) levels. Looking at the Relative Strength Index (RSI), at 67.43, this indicates this Prevailing bullish momentum In the stock that will continue until the index reaches 90. However, once the index reaches above 70, selling pressure may resume to build again on the stock.

Finally, the volume price trend on the weekly time frame is moving solidly above its 1-year moving average, suggesting there is plenty of room for the stock to advance in the short term.

First-quarter revenues rose 262% to $26 billion, driven by aggressive data center sales and demand for the Hopper graphics processor.

Revenues in the first quarter of fiscal 2025 rose 262% to record levels of $26 billion and beat consensus estimates of $24.7 billion. The strong revenue growth was driven by a 427% year-over-year increase in data center revenues, totaling $22.56 billion. Management attributed this increase to higher shipments of the company’s Hopper GPU, which continues to attract strong demand from data center cloud service providers.

The Nvidia Hopper GPU computing platform is also generating strong interest in large language models (LLM) and generative ΑΙ applications. Buoyed by this demand, management expects second-quarter revenue to reach a new high of $28 billion, underscoring continued growth.

Amid strong revenue growth, Nvidia delivered a 461% increase in adjusted earnings to $6.12 per share, beating consensus estimates. Conversely, operating expenses rose 43% but did not significantly impact the net income run rate, as net income grew 461% to $15.24 billion.

NVIDIA focuses on AI dominance: data center sales rise by 427%, supporting the expansion of technology giants in the field of artificial intelligence using Hopper GPUs

In previous years, Nvidia was best known for manufacturing chips and hardware used in game consoles. Gaming revenue made up a large portion of the company’s total revenue. However, with the advent of artificial intelligence, data centers have emerged as the core business segment, accounting for more than 86% of total revenue in the latest quarter.

In the first quarter, the GPU recorded a 427% increase in data center and computing revenues, driven by strong demand for the company’s Hopper GPU, which is increasingly used in data centers. Likewise, the company is benefiting from major cloud providers such as Amazon (AMZN), Microsoft (MSFT), and Google (GOOGL) leveraging its AI chips to enhance AI infrastructure at scale. Furthermore, Meta Platforms (META) plans to add another 200,000 H100 GPUs for its latest LLM software, pushing the target to 350,000 GPUs in 2024, underscoring strong market demand.

During the quarter, Nvidia expanded its strategic collaborations with Amazon Web Services, Google Cloud, Microsoft (MSFT), and Oracle (ORCL). The strategic partnership will see the company provide advanced generative AI chips that will be used to enhance the processing capabilities and powers of its data centres, which are the center of its multi-billion dollar cloud computing operations.

The strong demand for cloud AI services is evidenced by significant capital expenditures from major technology companies. For example, Microsoft increased its capital expenditures to $14 billion in the first quarter, Alphabet increased its capital expenditures to $12 billion, and Amazon spent $14 billion. Nvidia is a major beneficiary of this trend, as big tech companies continue to increase their spending in response to their big tech peers’ implementation of AI.

Finally, in addition to pursuing growth opportunities around the cloud, Nvidia has partnered with Johnson & Johnson (JNJ) to test AI capabilities on a connected digital ecosystem for surgical procedures. This strategic partnership aims to accelerate the delivery of real-time insights to assist medical professionals during or after procedures.

NVIDIA’s “Blackwell” GPU challenges Apple

The chip giant is also looking to boost its competitiveness as more companies look to eat up market share by supplying chips to power data centres. Apple (AAPL) has announced plans to leverage its years of chip design experience to produce chips, as it also looks to capitalize on massive opportunities in the data center sector.

Thus, Nvidia has confirmed the launch of its next generation AI GPU, Blackwell, before the end of the year. The new AI-powered chips are expected to further enhance and diversify the company’s revenue stream in this sector. Blackwell is designed to be “backwards compatible” with Hopper systems. Finally, the design aims to make the transition easier for Nvidia customers and attract more customers.

Diversifying beyond gaming: Pioneering networking and revolutionizing the automotive industry with advanced chips

In addition to pursuing growth opportunities in supplying chips to data centers, Nvidia is diversifying its revenue sources into other segments. The company continues to record strong sales in the sale of networking parts. The company’s $3.2 billion in networking revenue came as more companies built clusters using tens of thousands of its chips.

While gaming no longer represents the largest share of the chip giant’s revenue base, it’s still a key aspect of the puzzle. Revenue in the segment grew 18% year-over-year, although it declined 8% last quarter, underscoring that Nvidia’s gaming chips and hardware are still in high demand from gaming companies and developers.

Additionally, the chip giant has already unveiled new AI performance improvements for Windows that will allow it to deliver optimal performance on Nvidia GeForce RTX AI PCs and workstations as it continues to boost its prospects in the gaming world.

Increasingly more games are incorporating Nvidia’s RTX technology, including Star Wars, Outlaws, and Black Myth Wukong. Likewise, award-winning Nvidia DLSS AI display technology has been proven to increase graphics performance in games and applications; Hence, there is strong demand.

Likewise, Nvidia is also benefiting from the revolution in… Auto industry With the integration of entertainment and self-driving systems. New features require powerful chips, which Nvidia has proven capable of producing. Although automotive and advanced workstation chips are relatively small compared to the data center, they continue to generate interest and strong demand from BYD (OTCPK:BYDDF), XPeng (XPEV), and Nuro, among others.

Finally, electric car makers Lucid (LCID) and IM Motors have integrated the Nvidia Drive Orin platform into their vehicles, targeting customers in European markets. Hence, strong demand for Nvidia’s solutions and products in the automotive industry was the catalyst behind the 17% jump in revenue to $329 million.

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Nvidia shares have risen more than 600% since the beginning of last year, due to strong and accelerating demand for the graphics processing unit used in artificial intelligence models. While the company is still the poster child of the AI ​​revolution, it remains well-positioned to capitalize on the hype. The fact that technology giants led by Google, Amazon, Meta, and Oracle are increasingly buying and using its generative AI chips underscores its long-term revenue and profit growth prospects.

With the GPU Superstar showing no signs of slowing down, and with demand for AI chips outpacing supply, it remains a solid long-term investment play as we are in the early days of the AI ​​era. Given that the AI ​​market is worth approximately $2.4 trillion in 2023 and is growing at a CAGR of 32.4%, there are tremendous growth opportunities that Nvidia can capitalize on with powerful advanced GPUs, thus generating shareholder value.