NVIDIA Corporation (NASDAQ:NVDA) is well positioned to ride the wave of interest in artificial intelligence (AI) through its chip sales and cloud businesses, analysts are saying after the tech company posted better-than-expected 4Q results.
The big driver behind Nvidia’s quarterly growth was the success in its data centre business, fuelled by a rise in chip sales for AI, Tick Mill Group’s market analyst James Harte wrote Thursday.
“Nvidia’s position as a leading producer of graphics cards has helped it capitalise on this new growth area," Harte wrote.
Nvidia's 4Q results showed that it had rebounded from the prior quarter’s losses with earning per share of $0.88 versus $0.81 expected on revenues of $6.05 billion versus $6.01 billion expected.
Interest in AI capabilities growing
While both year-on-year EPS and revenues were lower, the quarter-over-quarter growth combined with a more optimistic 2023 outlook buoyed investor spirits.
Harte noted that Nvidia was “optimistic” about its chances of continued growth linked to surging demand from AI interest.
“With businesses of all sizes reportedly feeling an urgency to invest in AI capabilities, Nvidia is well positioned to ride the wave via its chip sales and cloud businesses,” the analyst said.
For the 1Q, the company forecast revenues of $6.5 billion, topping Wall Street’s own $6.35 billion forecasts.
A full stack data center-centric company
Meanwhile, analysts at Baird hailed the resilience of Nvidia's guidance as the chip maker sits “at the heard of several transitions” at a macro level, from general-purpose computing to accelerated computing and AI.
Internally, Baird analysts noted that the firm is migrating from a chip supplier to a full stack data center-centric company.
“Medium term, Nvidia's cloud initiatives, ChatGPT, and LLMs all represent secular growth drivers for Nvidia's H100,” analysts wrote in a note. “Risks include pace of H100 ramp in C2H23 relative to current expectations, macro, and vertical integration initiatives.”
Shares of Nvidia were 12.7% higher on Thursday afternoon at just under $234 in New York.
Contact Angela at angela@proactiveinvestors.com
Follow her on Twitter @AHarmantas