Frenzy on the New York trading floor. Investors on Wall Street once again have Nvidia – the current technology benchmark – in their sights as they await the results of the first fiscal quarter of 2024, which are published this Wednesday. There is no shortage of reasons to be envious of Nvidia, which in a few quarters has become the third most valuable company in the United States, with a market capitalization of 2.3 trillion dollars (2.14 trillion in euros), and which It already represents 5% of the S&P 500 index. All thanks to the sophisticated processors developed by the company, initially focused on the graphics cards used by video game fans, but which due to their design are particularly effective for the workload they demand. the artificial intelligence (AI) systems that large technology companies are developing. Everyone wants to have the best hardware to take advantage in the frenetic race for generative AI.
Thus, the firm dazzled the market after presenting its latest results last February. The company based in Santa Clara (California) broke the best forecasts by increasing its quarterly revenue by 265%, to 22,103 million dollars (20,328 million euros, at the current currency exchange rate). Profits also skyrocketed, a stratospheric 769%, up to 12,285 million dollars (11,053 million, in euros). In addition, it raised the revenue forecast for the quarter reported this week to $24 billion. The stock further accelerated its feverish bull run: it has multiplied its price by 6.5 times since the beginning of 2023 and almost doubles in 2024.
“We are facing more than just a financial event; “We are facing a great thermometer to measure the pulse of the artificial intelligence revolution and its impact on global markets,” said Javier Molina, senior market analyst at eToro. “Results are expected that justify the high capital expenditures on AI of many listed companies. Nvidia will reflect whether reality actually matches expectations,” he explains. The firm chaired by Jensen Huang has managed to turn its results into the most anticipated event on Wall Street; The market expects the accounts to define the path of big technology companies and microchip manufacturers on the stock market, with Nvidia becoming the barometer of Silicon Valley’s climate.
Although Nvidia’s stock market growth faltered after reaching a peak in March, the support of strategists has not wavered, and the company has managed to recover records. If Nvidia had the support of almost 91% of the market after presenting results in February, today 89% of analysts advise buying. Looking at the first quarter accounts, analysts anticipate a 242% increase in revenue to $24.6 billion (€23 billion). The net profit is estimated at 12,830 million dollars (about 12,000 million euros), more than six times last year’s result.
Ross Seymore, of Deutsche Bank European Research, anticipates that “AI leadership will continue” although the entity now advises holding the stock, rather than buying, with a target price of $850 (782 euros). “We expect the company to continue its trend of generating multi-billion dollar profits thanks to a demand for AI computing that remains healthy,” he said. UBS maintains its buy rating and sets the price target at 1,150, while the stock currently trades below $930. “We see another healthy rise,” they noted, “we believe there is still enough concern that the stock can continue to rise if our earnings view is confirmed.”
However, speculation in the market is also increasing. Nvidia has become the shortest value on Wall Street: more than 25.8 million dollars (23.7 million in euros) in Nvidia shares were short positions this Monday, which represented 1.2% of the floating capital , as confirmed by S3 Partners. (Short positions are when a trader profits when the stock falls.) Among the bassist voices is the infamous fund manager, Michael Burry, the protagonist of The Big Shortwhich has been betting against semiconductors since 2023.
“Nvidia’s rebound has kept short sellers awake at night, with losses of $11.87 billion so far this year, which represents a decline of 55% annually,” said Ihor Dusaniwsky, CEO of S3 Partners. Five days by mail from New York. In May, the bears have accumulated losses of 1.72 billion dollars. The company’s accounts can give air to these pessimistic investors and puncture the euphoria about artificial intelligence or, on the contrary, further fuel the fever for its shares and for the technology sector in general.
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