Nvidia shares edged higher in late Monday trading, following a trillion dollar market value gain during its second quarter peak, as a top Wall Street analyst issued a bullish second-half outlook for the market-leading AI-chip maker.
Nvidia (NVDA) launched its new Blackwell system of AI-powering processors this spring. The group continues to hold a commanding share of the market for the chips and systems needed to build out the massive data systems that so-called hyperscalers — such as Meta Platforms (META) , Amazon (AMZN) and Microsoft (MSFT) — will use to further their new technology ambitions.
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Blackwell products are more expensive than their H100 and H200 predecessors but provide more power and are more energy-efficient. Their introduction, however, had raised concern about a so-called air pocket in sales, as customers canceled orders of the legacy chips and waited for the new line of processors.
Those worries were largely mitigated by a robust near-term outlook from Nvidia in late May, which called for current-quarter revenue to rise to around $28 billion, with a 2% margin for error. The outlook came even as Nvidia noted that Blackwell wouldn't start shipping until the back half of the year.
For the three months ended in April, data center sales, which include the group's key AI offerings, surged more than fivefold to a record $22.6 billion while gross profit margin expanded to 78.9%
Adding to that optimism, Morgan Stanley analyst Joseph Moore boosted his Nvidia price target by $28 to $144 a share on Monday while affirming an overweight rating following checks from his team following visits to China and Taiwan suggest that "sales of both products will remain strong."
Morgan Stanley: No NVDA Blackwell 'air pocket'
"The catalyst path remains strong, as the very strong surge in H20 builds and demand removes any concern for us about a pre-Blackwell pause," Moore and his team wrote.
"Hopper builds continue to go up, as H100 starts to transition to H200 (bringing better memory bandwidth from HBM3e as well as higher memory content)," they added.
Nvidia, Moore and his team wrote, "remains the most compelling narrative in the AI [semiconductor] space," adding that "visibility and backlog will improve materially" as the transition from the H100 and H200 to Blackwell progresses.
Nvidia is also moving forward with Rubin, another advanced line of AI-powering chips, which CEO Jensen Huang unveiled during a speech at the National Taiwan University in Taipei.
Named after the American astronomer Vera Rubin, who is credited with discovering so-called dark matter, the new Rubin systems will be rolled out in 2026, Huang said.
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“Our company has a one-year rhythm," Huang said. "Our basic philosophy is very simple: build the entire data-center scale, disaggregate and sell to you parts on a one-year rhythm, and push everything to technology limits.”
Nvidia shares were last marked 0.41% higher in late day Monday trading to change hands at $124.05 each, extending the stock's 2024 gain to a staggering 157%.
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