Nvidia’s stock looks to snap losing streak as earnings optimism builds

“Given the pushout of [Advanced Micro Devices Inc’s] AMD,
+2.31%
MI300X, we believe Nvidia has been able to source increased [chip on wafer on substrate] capacity at Taiwan Semiconductor Manufacturing Co.
TSM,
+1.44%,
” Vinh said.

Read: Nvidia earnings to offer first true glimpse of the AI windfall

Shares of Nvidia rallied more than 5% to an intraday high of $456.56 in Monday trading, after having logged declines in each of the prior three sessions for a total loss of 1.5%. The shares are up more than 210% on a year-to-date basis, compared with a 39% gain in the PHLX Semiconductor Index
SOX,
a 14% rise in the S&P 500
SPX
and a 28% surge in the tech-heavy Nasdaq Composite
COMP
over the same span.

In addition, Nvidia plans a fall launch of its L40S GPU for small to medium-sized model training and inferencing with competitive performance versus its A100. That debut will be significant given tech restrictions related to China.

“Given L40S meets the performance threshold of export restriction and doesn’t require CoWoS packaging, combined with favorable pricing (est. $7K-$8K/GPU), we expect this lineup can incrementally fulfill some of the pent-up GPU demand in the near term, particularly in China,” said Vinh, who has an overweight rating on the stock.

Read: ‘Magnificent Seven’ stocks are losing some of their shine, but their bonds are doing fine

Vinh raised his fiscal second-quarter revenue forecast to $12.7 billion and upped his earnings outlook to $2.49 a share. His prior expectations were for $11.1 billion and $2.05, respectively.

He also now forecasts fiscal third-quarter revenue of $14.8 billion and earnings per share of $3, up from prior projections of $12.4 billion and $2.34, respectively.

Read: Nvidia gets more good news from Big Tech, even as AI spending ‘may not lift all boats’

Of the 50 analysts who cover Nvidia, 43 had buy-grade ratings, six had hold ratings and one had a sell rating, along with an average price target of $432.99.