Nvidia’s stock rose on Thursday after announcing an upbeat second-quarter revenue forecast and a stock split, further solidifying its dominance in the AI-related chips market. The company’s stock rose 6.5% in premarket trading, with rival chipmakers Advanced Micro Devices, Broadcom, and Micron Technology also seeing gains. Nvidia projected second-quarter revenue of $28 billion, exceeding analysts’ expectations of $26.66 billion. The company’s stock has surged nearly 92% this year, and is set to gain $165 billion in market cap at current price levels.
If Nvidia’s stock closes above $1,000 on Thursday, it would mark the first time the company’s stock has surpassed that threshold. Analysts believe the stock will reach $1,000 per share, but are uncertain if it can maintain that level in the future. Nvidia also announced a ten-for-one stock split, effective June 7, and increased its quarterly dividend by 150% on a post-split basis. The company’s chips are considered the gold standard in AI, and its results are seen as a key indicator for the growing AI industry.
Nvidia’s upcoming Blackwell AI chips, set to ship in the current quarter with production increasing in the following quarter, are expected to further drive demand. The company continues to see demand exceeding supply, but analysts do not see signs of excess inventory at this time. Brokerages have raised their price targets on Nvidia, with Rosenblatt Securities and Cantor Fitzgerald having the highest PT of $1,400 among 58 analysts covering the firm. Taiwan Semiconductor Manufacturing, Nvidia’s contract chipmaker, expects to more than double its advanced packaging capacity this year.
Nvidia’s 12-month forward price-to-earnings ratio of 34.7 is lower than that of rival chipmakers AMD and Super Micro Computer, but higher than Micron’s ratio. Analysts believe fears of an “air pocket” in the near term are likely to mellow, as demand for Nvidia’s chips remains strong. The company’s results are closely watched as a barometer for the AI industry, which has fueled investor enthusiasm and contributed to the rise in U.S. stocks. With its strong growth and market dominance, Nvidia’s stock price is expected to continue its upward trend in the coming quarters.
