Stock market today: S&P 500 climbs as health care, tech gain; Nvidia earnings loom
On Thursday, Oppenheimer reiterated its Outperform rating on NVIDIA Corporation (NASDAQ:NVDA) with a steady price target of $175.00. The firm’s analysts anticipate a positive performance in NVIDIA’s fourth-quarter results for January and the first-quarter outlook for April, driven by continuous demand for AI accelerators from cloud service providers (CSPs). This optimism appears well-founded, as InvestingPro data shows NVIDIA achieved remarkable revenue growth of 152% in the last twelve months, with an impressive gross profit margin of 75.86%. The company maintains a perfect Piotroski Score of 9, indicating exceptional financial strength.
The demand for NVIDIA’s H200 is expected to be stronger than previously anticipated in the near term, as production of the Blackwell architecture, which has been supply-constrained, begins to ramp up. Oppenheimer estimates that the H200 could account for 30% of NVIDIA’s product mix this year. Additionally, the GB200 has been in full production since December. With the company’s next earnings report due on February 26, InvestingPro subscribers can access detailed financial analysis and 18 additional ProTips to make informed investment decisions.
Looking ahead, Oppenheimer predicts that the upcoming GB300, expected to launch towards the end of 2025, is likely to feature a single rack configuration, known as NVL72. This indicates that potential issues with data center cooling are being addressed. The firm also notes the introduction of DeepSeek as a positive development for NVIDIA, as CSPs are quickly adopting new innovations into their Western models. NVIDIA’s strong market position is reflected in its robust financial health, with InvestingPro reporting a current ratio of 4.1 and minimal debt-to-equity of 0.16.
The report highlights a significant increase in capital expenditure commitments from major tech companies such as Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOGL), and Meta Platforms (NASDAQ:META). These companies are intensifying their efforts to achieve artificial general intelligence (AGI), with hyperscale capital expenditures now projected to rise by around 40% this year, totaling over $300 billion compared to $220 billion in 2024. This figure has doubled since early January predictions.
According to Oppenheimer, CSPs are developing custom AI application-specific integrated circuits (ASICs) that coexist with GPUs. ASICs are mainly utilized for internal workloads, while GPUs are employed for a broader range of dynamic, high-performance AI applications. The analysis concludes that NVIDIA remains in a strong position within the AI sector, benefiting from its comprehensive AI hardware and software stack. With a market capitalization of $3.41 trillion and an "GREAT" financial health score from InvestingPro, NVIDIA continues to demonstrate its dominance in the semiconductor industry. Access the comprehensive Pro Research Report for deeper insights into NVIDIA’s market position and growth potential.
In other recent news, NVIDIA is experiencing significant developments in its financial and operational landscape. KeyBanc Capital Markets has raised its price target for NVIDIA from $180 to $190, maintaining an Overweight rating, due to expected strong fourth-quarter results and positive first-quarter guidance. Meanwhile, HSBC has adjusted its price target for NVIDIA from $185 to $175, while still endorsing a Buy rating, anticipating the company will surpass revenue targets despite supply chain challenges. Analysts expect NVIDIA’s revenue to reach approximately $5 billion and $10 billion in the fourth quarter of FY25 and the first quarter of FY26, respectively, exceeding consensus estimates.
Furthermore, DeepSeek, a Chinese AI startup, is contemplating raising external funding due to increased demand for its AI products, with potential interest from major investors like Alibaba (NYSE:BABA) Group. This development is partly driven by the company’s need for more NVIDIA AI chips, as DeepSeek looks to expand its AI capabilities. Additionally, South Korea has announced plans to secure 10,000 high-performance GPUs to bolster its national AI development efforts, highlighting the global demand for advanced AI technology.
In related industry news, Figure AI Inc. is in discussions to secure $1.5 billion in funding, which would value the company at $39.5 billion, reflecting growing interest in humanoid robotics. This funding round is led by Align (NASDAQ:ALGN) Ventures and Parkway Venture Capital, emphasizing the increasing investment in AI-driven innovations. These developments indicate a dynamic and rapidly evolving landscape in the AI and technology sectors.
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