TLDR
- Nvidia stock edged down 0.5% to $211.42 in premarket trading Tuesday after rising 3.5% Monday
- The company plans to raise at least $20 billion in investment-grade debt, its first bond offering since 2021
- Nvidia reported Q1 revenue of $81.62 billion, up 85.2% year over year, beating estimates of $78.42 billion
- The board approved an $80 billion share buyback and raised its quarterly dividend from $0.01 to $0.25 per share
- Wall Street consensus is “Buy” with an average price target of $305.67; Bank of America has a $350 target
Nvidia (NVDA) stock pulled back slightly Tuesday morning after a strong session the day before. The stock was down 0.5% at $211.42 in premarket trading, following a 3.5% gain on Monday. The dip came as investors processed news that the company plans to raise at least $20 billion in investment-grade bonds — its first U.S. debt offering of this kind since 2021.
The bond deal was reported by Bloomberg and appears to be aimed at funding Nvidia’s massive AI chip and infrastructure buildout. Rather than draining its cash reserves, Nvidia is tapping the debt markets while its balance sheet is in solid shape — a debt-to-equity ratio of just 0.04 underlines that point.
Monday’s rally was driven in part by the bond news, which investors read as a sign of confidence in the company’s long-term cash flows. A broader semiconductor rally also helped, with chip stocks moving higher on improved market sentiment and reports of easing geopolitical tensions.
Nvidia’s most recent earnings report, released May 20, gave investors plenty to feel good about. The company posted EPS of $1.87, beating the consensus estimate of $1.76. Revenue came in at $81.62 billion, well above the $78.42 billion analysts expected and up 85.2% from the same quarter last year.
Return on equity hit 96.94% and net margin was 62.97%. Analysts now expect full-year EPS of $8.65.
Capital Returns and Dividend Boost
The earnings report also came with two shareholder-friendly moves. The board approved an $80 billion stock buyback authorization, and Nvidia raised its quarterly dividend from $0.01 to $0.25 per share. The next dividend will be paid June 26 to stockholders of record as of June 4.
Institutional interest in NVDA has been growing. Niles Investment Management opened a new position in Q4, buying 49,612 shares worth around $9.25 million. NVDA now makes up 7.0% of Niles’ portfolio, its fourth-largest holding. Several other institutions also added to existing positions, and 65.27% of Nvidia stock is held by institutional investors.
Analyst Targets Remain High
Wall Street is firmly in the bull camp. Bank of America raised its price target to $350 from $320 and kept its “Buy” rating. Royal Bank of Canada has a $280 target. President Capital lifted its target to $295. BNP Paribas Exane set a $285 target with an “outperform” rating. Wall Street Zen upgraded NVDA to “strong buy” in late May.
The consensus across 54 analysts tracked by MarketBeat sits at “Buy” with an average price target of $305.67.
On the insider side, Director Aarti S. Shah sold 19,000 shares in March at $176.71 per share. Director John Dabiri sold 625 shares on May 27 at $214.00, under a pre-arranged 10b5-1 plan.
Nvidia’s 52-week range sits between $142.03 and $236.54. The stock trades well above both its 50-day moving average of $207.54 and its 200-day moving average of $191.65. Market cap stands at $5.14 trillion.
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