Wall Street raises price targets on Nvidia amid excitement over its new chip

• Nvidia’s third-quarter earnings beat estimates but fell short of high expectations.

• Yet Wall Street analysts responded by massively raising their price targets for the stock.

• The stock buyback potential and competitive advantage boost analyst confidence.

Nvidia successfully tested Wall Street’s patience with its highly anticipated third-quarter earnings report on Wednesday.

Although Nvidia beat analysts’ average estimate for revenue and earnings, it fell short of the highest expectations and its fourth-quarter revenue guidance relative to expectations was narrower than those in the previous quarters. previous ones.

Wall Street was nevertheless impressed by the results, sparking a wave of price target hikes from more than 20 companies as analysts anticipate an imminent sales boom with the release of Nvidia’s next-generation Blackwell chip. .

JPMorgan raised its Nvidia price target from $155 to $170, emphasizing that the company has built a broad competitive moat around its business.

“The team continues to maintain a 1-2 length lead over its competitors with its silicon/hardware/software platforms and strong ecosystem and the team is further distancing itself with its aggressive cadence of new product launches and increased product segmentation over time,” JPMorgan analyst Harlan Sur wrote Thursday.

Goldman Sachs raised its price target from $150 to $165, expecting Nvidia to generate more than $200 billion in revenue next year.

Additionally, the bank pointed out that Nvidia has a trick up its sleeve to help boost its stock price in the future: a potentially massive stock buyback program.

Nvidia repurchased $11 billion of its own shares in the third quarter, an increase of 188% from the same quarter a year earlier. Goldman said it expects “a gradual increase in share repurchases” by the company, reaching a cumulative amount of $181 billion by 2026.

“It’s a real source of liquidity,” Ben Reitzes, managing director of Melius Research, told CNBC on Thursday. “At some point they have to buy back more shares because they just can’t do anything with it.”

Rosenblatt Securities continues to have the highest price target on Wall Street for Nvidia stock, raising it to $220 from its previous target of $200. This represents a potential upside of 52% from the stock price as of Thursday morning.

Even DA Davidson, who rated Nvidia “neutral” due to valuation concerns, increased his price target from $90 to $135.

“While management hasn’t provided much color beyond the next quarter for Blackwell, it expects strong demand coupled with supply constraints similar to those it experienced with the ramp-up Hopper,” DA Davidson analyst Gil Luria wrote in a note.

Nvidia’s average price target jumped to around $168 per share after the company’s earnings release, according to Bloomberg data. It was closer to $150 per share before the earnings release.

Investors reacted to Nvidia’s results by buying the stock’s short-lived dip.

While Nvidia shares fell 5.5% after hours Wednesday, they rebounded and rose 5% to a record high during Thursday’s trading session. This represents a change in market value of more than $200 billion.

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