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Nvidia Shares Jump 6%, Gains Spill Over Among Chipmakers

Nvidia Shares Jump 6%, Gains Spill Over Among Chipmakers

Shares of tech company Nvidia climbed more than 6% Friday after it reported a 136% jump in adjusted earnings per share.

Nvidia Corp.’s (Nasdaq: NVDA) quarterly earnings report revealed a 41% year-over-year increase in revenue. The company said its Q4 revenue was $3.11 billion, up from $2.21 billion reported a year ago.

For fiscal 2020, the company said its revenue was down 7% to $10.92 billion but its earnings per share skyrocketed to $1.89 per share — up from $0.80 a year ago.

AI and Machine Learning Create Nvidia Share Jump

Nvidia CEO Jensen Huang said the jump in revenue was attributed to an increase in data center-related product sales.

“NVIDIA RTX ray tracing is reinventing computer graphics, driving powerful adoption across gaming, VR and design markets, while opening new opportunities in rendering and cloud gaming. NVIDIA AI is enabling breakthroughs in language understanding, conversational AI and recommendation engines ― the core algorithms that power the internet today,” Huang said in the quarterly report. “And new NVIDIA computing applications in 5G, genomics, robotics and autonomous vehicles enable us to continue important work that has great impact.

“We are well-positioned for the greatest technology trends of our time.”

NVDA chart 2-14-20

Since a dip to $127 in January 2019, Nvidia shares have jumped more than 125%.

Analysts at Susquehanna said while they had expected the company to beat market consensus expectations thanks to the data center demand, they had never expected this kind of upside.

“Nvidia’s dream-a-dream AI story is solidly back on track,” analysts from the brokerage said in a note to clients.

Gains Translate to Support for Others

Sales spikes and the upward movement of Nvidia shares spread the good news to companies in the same space.

Because of its increase in data center sales and increases in the gaming and virtual reality spaces, Wall Street analysts moved projections of Advanced Micro Devices (Nasdaq: AMD) up Friday.

Analysts with RBC raised its price target for Advanced Micro Devices to $66 from $63 and maintained an “outperform” rating.

“AMD has made the correct long-term bets that will pay over the next 12 months and beyond,” Steves said, saying the “overall gaming and data center market is healthy.”

That health and increased demand in microchips are attributed to the strong gains made by Nvidia.

“With solid product cycles in gaming and sustainable strong demand from data center customers, we continue to see an upward bias in revenues, margins, and earnings as we move through FY21,” JPMorgan analysts wrote in a note.


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