TLDR
- Nvidia stock rose 7.3% to $224.91 in premarket trading after its quarterly earnings report
- The company projected 70% sales growth for its next fiscal year, topping Wall Street expectations of under 50%
- An expanded Amazon partnership will see Amazon deploy an additional two million Nvidia processors
- Nvidia has agreed to acquire AI development platform Hugging Face for $12.9 billion, per The Information
- UBS raised its price target on NVDA from $280 to $300, maintaining a Buy rating
Nvidia stock jumped 7.3% to $224.91 in premarket trading on Thursday after the company posted quarterly earnings that finally convinced the market it still has room to grow.
It was the fifth consecutive earnings cycle for Nvidia, but the first time in that stretch that the stock actually rose the following session. The previous four reports each resulted in a post-earnings dip.
The key number driving the move was revenue guidance. Nvidia projected 70% sales growth for its next fiscal year. Wall Street had been expecting less than 50%.
CEO Jensen Huang said sales could double if supply constraints weren’t holding the company back. That kind of statement carries weight when it comes from a company already valued at over $5 trillion.
One of the ongoing concerns heading into earnings was whether Nvidia’s biggest customers were moving toward custom chips. That fear got a direct response in the form of an expanded deal with Amazon.
Amazon will deploy an additional two million Nvidia processors as part of the expanded partnership. That’s the kind of headline that quiets the custom chip narrative, at least for now.
Gross Margins Draw Scrutiny
The report wasn’t without its weak spots. Gross margins are expected to decline in the near term, driven by rising memory prices.
Nvidia also drew attention for using its balance sheet to guarantee customer debt and extending payment terms for some buyers. Critics have called it circular financing.
CFO Colette Kress pushed back on that framing. “The equity returns on our invested capital will be excellent,” she said.
Hugging Face Acquisition
Beyond the earnings beat, Nvidia confirmed a major strategic move. The company has agreed to acquire Hugging Face, an AI development platform, for $12.9 billion, according to The Information.
Nvidia did not immediately respond to a request for comment on the deal early Thursday.
UBS analyst Timothy Arcuri raised his price target on NVDA to $300 from $280 following the results, keeping a Buy rating in place.
Arcuri noted that Nvidia’s guidance for calendar 2027 implies earnings per share above $16, even with gross margin pressure from memory price inflation. UBS estimates Nvidia is on track to ship around 13 gigawatts of compute capacity this year.
Several other analysts also moved their targets higher. Raymond James lifted its price target to $515 with a Strong Buy rating. Cantor Fitzgerald kept an Overweight rating and a $350 target, noting Nvidia’s Compute segment is currently sold out. Rosenblatt raised its target to $390. Argus reiterated its Buy rating.
UBS noted that demand still far exceeds the guidance figure and that there is room to raise estimates further if supply and data center capacity allow.
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