David Zalubowski/AP; Chelsea Jia Feng/BI
Nvidia successfully tested Wall Street's patience after with its hotly anticipated third-quarter earnings report on Wednesday.
While Nvidia beat the average analyst estimate for revenue and profits, it didn't meet the loftiest expectations, and its fourth-quarter revenue guidance relative to expectations was narrower than prior quarters.
Wall Street was nevertheless impressed by the results, sparking a wave of price target increases from more than 20 firms as analysts anticipate an imminent sales boom with the release of Nvidia's next-generation Blackwell chip.
JPMorgan boosted its Nvidia price target to $170 from $155, highlighting that the company has built a large competitive moat around its business.
"The team continues to maintain a 1- 2 step lead ahead of competitors with its silicon/hardware/software platforms, and a strong ecosystem and the team is further distancing itself with its aggressive cadence of new product launches and more product segmentation over time," JPMorgan analyst Harlan Sur wrote on Thursday.
Goldman Sachs increased its price target to $165 from $150 on the expectation that Nvidia will deliver more than $200 billion in revenue next year.
Additionally, the bank highlighted that Nvidia has a trick under its sleeve to help boost its stock price going forward: a potentially massive stock buyback program.
Nvidia repurchased $11 billion worth of its own stock in the third quarter, up 188% from the year-ago quarter. Goldman said it expects "a step-function increase in share repurchases" by the company, hitting a cumulative $181 billion by 2026.
Goldman Sachs
"This is a cash gusher," Ben Reitzes, managing director at Melius Research, told CNBC on Thursday. "At some point they have to buyback more stock because there's simply nothing they can do with it."
Rosenblatt Securities continues to have the highest Wall Street price target for Nvidia stock, increasing it to $220 from its prior target of $200. That represents a potential upside of 52% from the stock's price on Thursday morning.
Even DA Davidson, which has rated Nvidia at "Neutral" due to valuation concerns, increased its price target to $135 from $90.
"While management did not give much color beyond the next quarter for Blackwell, they expect strong demand coupled with similar supply constraints that they experienced with the ramp up of Hopper," DA Davidson analyst Gil Luria wrote in a note.
The average price target for Nvidia jumped to about $168 per share after the company's earnings results, according to Bloomberg data. It was closer to $150 per share before the earnings release.
Investors responded to Nvidia's results by buying the short-lived decline in the stock.
While Nvidia shares dropped as much as 5.5% in after-hours trading on Wednesday, the stock rebounded and rallied as much as 5% to a record high in Thursday's trading session. That's a more than $200 billion swing in market value.
