Nvidia’s shares continue to ascend to unprecedented heights, driven by the global artificial-intelligence explosion fueling its robust growth. The Santa Clara-based tech giant recorded an impressive 4.5% increase in stock value, with shares trading at $492.56 early Thursday. This leap comes on the back of Nvidia’s quarterly earnings and outlook surpassing Wall Street’s expectations, assuaging worries over supply constraints and China’s demand. Stifel analyst Ruben Roy noted the company’s results exceeded even the optimistic whisper numbers, prompting him to upgrade his rating on Nvidia from Hold to Buy and raise the target price to $600 from $440.

Addressing sustainability concerns, Nvidia has assured an increase in product supply in the upcoming fiscal year to meet the surging demand for AI chips. "With visibility extending into ’24, [Nvidia] management has qualified additional suppliers…and expects to increase supply each quarter through next year to meet demand,” wrote KeyBanc analyst John Vinh in a research note. Vinh subsequently raised his target price on Nvidia to $670 from $620, maintaining an Overweight rating on the stock. Furthermore, the company’s revenue from China remained within the historical range of 20% to 25%, indicating the earnings beat wasn’t solely driven by preemptive Chinese orders amid fears of future U.S. restrictions.

Nvidia’s Record High Shares Indicate AI Boom Continues

Nvidia’s stock skyrocketed to an all-time high, reflecting the sustained impact of the artificial intelligence boom on its growth. The company’s shares rose 4.5% to $492.56 early last Thursday following its quarterly earnings and outlook that surpassed expectations. The surge in shares also eased concerns regarding supply constraints and demand from China.

Analysts’ Reactions to Nvidia’s Earnings

Analysts were impressed with Nvidia’s performance, with results exceeding even the high-end whisper numbers. Stifel analyst Ruben Roy acknowledged underestimating the potential shift of $1 trillion of installed data-center infrastructure from general-purpose compute to accelerated compute architectures. Roy upgraded his rating on Nvidia from Hold to Buy and increased the target price from $440 to $600.

Addressing Concerns about Sustainability

Nvidia reassured investors about the sustainability of its growth by stating that it expects product supply to increase in the upcoming fiscal year, addressing concerns about meeting the rising demand for AI chips. Nvidia’s management has qualified additional suppliers and plans to increase supply each quarter through next year, wrote KeyBanc analyst John Vinh in a research note. He also increased his target price on Nvidia to $670 from $620, maintaining an Overweight rating on the stock.

Revenue from China

Nvidia’s revenue from China fell within the company’s historical range of 20% to 25%, indicating the earnings beat wasn’t driven by anticipated orders from China due to future U.S. restrictions. UBS analysts noted that Nvidia could reallocate Chinese shipments of its A800 and H800 chips, which have intentionally limited capacity to meet U.S. export restrictions, if necessary.

Dominating the AI Market

Nvidia is currently dominating the AI market with an estimated 90% market share for AI-related GPUs. Celebrating this, Oppenheimer’s Rick Schafer wrote, "Nvidia remains the purest scale play on AI adoption." He also increased his target price on Nvidia to $650 from $500 and maintained an Outperform rating on the stock.

Future Competition and Growth Potential

While competition doesn’t appear to be an immediate concern, Daniel Newman, CEO of technology research firm Futurum Group, suggested that there could be opportunities for companies such as Advanced Micro Devices (AMD) and Intel (INTC) to rival Nvidia in AI chip offerings.

Takeaway

Nvidia’s record-high shares and robust earnings report reflect the ongoing AI boom and its leading position in the market. With the company’s commitment to increasing supply and its dominance in the AI-related GPU market, Nvidia’s growth trajectory appears promising. However, the window for alternative AI chip providers to grow could be narrowing, suggesting Nvidia needs to stay innovative and proactive to maintain its market leadership.