NVIDIA Corp. (NASDAQ:NVDA) stock is trading up more than 7% in Thursday’s premarket session as investors react to the company’s quarterly results and upbeat commentary on AI demand. The move follows a double beat and management’s message that the AI infrastructure buildout is “at full steam.”
The Big Tech giant reported second-quarter revenue of $96.22 billion (versus $92.18 billion expected) and adjusted EPS of $2.22 (versus $2.10 expected), with gross margin at 75.0%. CEO Jensen Huang said “demand is accelerating,” and pointed to Vera Rubin ramping into full production with partners.
NVIDIA also guided third-quarter revenue to a range of $105.84 billion to $110.16 billion and said it ended the quarter with $99.0 billion remaining under its share repurchase authorization.
The company remains central to the AI investment story, but experts differ on how much upside investors should expect as growth expectations rise, competition expands and markets demand clearer returns from massive AI spending.
Moorhead Says NVIDIA Remains The AI Bellwether
Moor Insights & Strategy CEO and Chief Analyst Patrick Moorhead told CNBC that NVIDIA still serves as the bellwether for AI because far more software companies use its GPUs than competing platforms.
He noted that NVIDIA delivered a four-way beat and 126% revenue growth, but the company failed to reach some buy-side whisper expectations. Investors have also become accustomed to unusually large beats, making strong results less likely to generate the same stock reaction as before.
Moorhead expects large hyperscalers and major AI model developers to create their own chips, but he believes rapidly expanding AI demand makes it difficult for rivals to take enough share to materially disrupt NVIDIA in the near term.
He also highlighted NVIDIA’s ability to secure high-bandwidth memory ahead of competitors, while pointing to robotics and industrial IoT as longer-term AI growth opportunities.
Meeks Sees No Meaningful Slowdown Before 2028
Freedom Capital Markets Head of Technology Research Paul Meeks told CNBC that he remains very bullish on NVIDIA and the broader AI ecosystem. He does not expect a meaningful slowdown until 2028 or later.
Meeks said NVIDIA’s results and guidance continue to counter concerns that massive GPU and AI infrastructure investments will fail to generate adequate returns.
He also highlighted NVIDIA’s valuation, saying the stock trades at roughly 16 to 17 times earnings, below the broader S&P 500 multiple and at about half AMD’s multiple.
Meeks believes stronger evidence that companies can monetize AI investments could unlock further upside. He also sees lower counterparty risk in NVIDIA’s financing arrangements because financially strong hyperscalers have driven roughly 90% of AI infrastructure spending to date.
Hickey Says NVIDIA’s Stock Hypergrowth May Be Over
Bespoke Investment Group co-founder Paul Hickey takes a more measured view of NVIDIA’s stock prospects.
Hickey told CNBC that NVIDIA’s enormous size ensures it will remain important to the broader market, but heavy investor attention makes it increasingly difficult for the company to deliver surprises capable of driving outsized share-price gains.
He also noted that NVIDIA showed essentially zero correlation with the SOXX semiconductor ETF over the previous three months, even as the stock continued to outperform weaker semiconductor shares.
Hickey believes NVIDIA’s period of hypergrowth in its stock price is likely behind it. Still, he considers the broader market an AI bull market and said AI stocks eventually need to regain leadership for that bull market to continue.
Top ETF Exposure
- Sapient Quality Select ETF (NASDAQ:SQS): 9.60% Weight
- Franklin Focused Dynamic Growth ETF (NASDAQ:FFOG): 9.73% Weight
- First Trust Innovation Leaders ETF (NYSE:ILDR): 9.79% Weight
Significance: Because NVDA carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.
Price Action
NVDA Stock Price Activity: NVIDIA shares were up 7.41% at $225.19 during premarket trading on Thursday, according to Benzinga Pro data.
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