Nvidia shares edged higher in Tuesday trading ahead of its highly anticipated fiscal-second-quarter-earnings report later this week and as a top Wall Street analyst made a key price-target upgrade.
Nvidia ( NVDA ) shares have far outpaced gains for the broader Nasdaq benchmark over the past month, rising more than 13% from their early August lows.
The market move reflected optimism that demand for artificial intelligence will continue to accelerate well into the second half and beyond, even amid some delivery delays and supply-chain constraints for the company's key AI-powering chips and processors.
The group's newly launched Blackwell line, which is forecast to power the group's data center revenue as high as $150 billion next year, is reportedly suffering some design flaws that may delay its delivery to key Nvidia customers until later in the year.
Analysts had forecast Blackwell to start contributing to Nvidia's top-line growth in the third quarter and find their way into global customer data centers by the year's final three months.
Barry Lam, chief executive of Quanta Computer and a critical peg in Nvidia's server building supply chain, told an event in Taiwan Monday that his company continued to ship AI servers with legacy H100 and H200'Hopper chips over the second quarter, and sees triple-digit revenue growth this year.
Blackwell delays in focus
KeyBanc Capital Markets analyst John Vinh said in a note published last week that "Blackwell shipments in the fiscal third quarter have been backfilled with higher Hopper bookings." He doesn't see the delay affecting NVDA's second-quarter results or its near-term outlook.
Wall Street forecasts are pointing to a consensus bottom line of 64 cents a share, a 137% increase from the year-earlier period, with revenue more than doubling to $28.68 billion.
Nvidia told investors in May that current-quarter revenue would rise to around $28 billion. The at the time stronger-than-expected estimate assuaged investors' concern about delays for orders of H100 chips tied to the Blackwell launch.
Related: Analysts: What to know before Nvidia earnings are reported this week
Truist Securities analyst William Stein, in a note published Tuesday, said "fundamental and sentimental factors appear to be still improving" for Nvidia. He raised his price target on the group by $5 to $145 a share, while holding his buy rating in place.
"Our regular dialog with component buyers and sellers reflected Nvidia business trends continuing to improve," Stein and his team wrote ahead of the tech giant's July-quarter earnings.
"This, combined with publicly available data about AI investments and adoption lead us to raise estimates modestly," he added, nudging his full-year earnings target to $3.61 a share from $3.39.
Cloud spending splurge
Hyperscalers, the major providers of massive data centers and cloud services, are poised to spend around $500 billion over the next two years building out their massive infrastructure, according to estimates from Barclays. They aim to leverage their datasets to enhance sales of everything from drive-through dining to the most complicated pharmaceutical testing.
Technology market analysts at Canalys noted that cloud infrastructure spending over the second quarter rose 19% from a year earlier to around $78.2 billion, driven by investments from Amazon ( AMZN ) , Microsoft ( MSFT ) and Meta Platforms ( META ) .
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"In the face of transformative tools like AI, the main providers will invest for fear of missing out," said Canalys Vice President Alex Smith. "AI relies on large-scale computing power and storage, and the hyperscalers hope that AI-powered services become the next compelling reason for customers to transition to the cloud.”
Nvidia shares were marked 0.25% higher in premarket trading to indicate a Tuesday opening bell price of $126.78. Such a move would extend the stock's six-month advance to around 61% and value the group at around $3.11 trillion.
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