Since the pandemic caused by the worldwide Covid-19 infections, companies focused on the technology sector suffered several problems, mainly due to the shortage of supplies. However, it seems that for some technology companies like Nvidia, this is now a thing of the past.
Nvidia Corporation seems to be one of the companies to keep an eye on for the future. Its numbers have gradually been improving. In fact, at the end of 2022, its revenues were down but exceeded Wall Street forecasts, which suggests that, in this case, it is possible to take some positives out of this decline.
During last year’s last quarter, Nvidia had revenues of $6.05 billion, down 21% from the previous quarter. Although this may seem negative, analysts were expecting $6.02 billion, so the company can boast that it slightly exceeded this figure.
On the other hand, so far in 2023, its shares have soared more than 60%, and what’s most surprising is that much of that figure came in during the last week.
Nvidia’s trading is positive despite the fact that the situation of the Nasdaq Composite, the index to which it belongs, is quite the opposite. Since its close on Friday of last week, the index has fallen by more than 3%.
Why is Nvidia doing so well?
The rise in the semiconductor company’s shares is mainly because investors placed value on Nvidia’s potential in the Artificial Intelligence (AI) sector.
Investors and analysts are mainly focused on the company’s future, which involves a strong focus on machine learning. The company announced via a statement that they are forming partnerships with “leading cloud service providers to offer AI-as-a-Service that provides enterprises with access to Nvidia’s world-leading AI platform.”
The company used to be known for its graphics cards; however, after this announcement, its business model changed and AI will now take on a larger role.
Nvidia communicated that in the future customers “will be able to contact each layer of Nvidia’s AI – the AI supercomputer, acceleration library software or pre-trained AI generative models – as a cloud service.”
Executives from Nvidia took time to engage in dialogue and explain in depth via a conference call about the potential of this product and the growth the company would have.
“Large generative language models with over 100 billion parameters are the most advanced neural networks in the world today,” said Executive Vice President and CFO Colette Kress. “Nvidia’s expertise spans AI supercomputers, algorithms, data processing, and training methods that can bring these capabilities to businesses,” she added.
Is it a good time to buy Nvidia stock?
Adding to the company’s vision for the future thanks to AI, Nvidia also benefited in gaming product revenue after two consecutive quarters of declines. Sales growth in that sector was up 16% sequentially.
It is more than clear that investors’ view of Nvidia is very positive. The combination of near-term gains from gaming and the future potential of artificial intelligence infrastructure gave the stock a big boost.
According to Wall Street specialists, Nvidia shares have a “Moderate Buy” rating, and its average price target is $255.21, which implies a 7.9% upside potential.
To further motivate shareholders, Nvidia CEO Jensen Huang said, “our guidance for this year has changed dramatically as a result of the last 60 to 90 days.”
What are your thoughts? Do you think it’s a good idea to be so hopeful about Nvidia’s future with AI?
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(Information in this post is for general informational purposes only. It cannot and should not be considered as suggestions or recommendations regarding investing or financial decisions.)