Why Nvidia Stock Popped on Wednesday

What happened

Shares of Nvidia (NVDA 5.13%) surged higher Wednesday, jumping as much as 3.3%. As of 12:46 p.m. ET, the stock was still up 3.1%.

The catalyst that sent the semiconductor specialist higher was analyst reaction to announcements made during Nvidia’s 2022 Global Technical Conference (GTC).

So what

Oppenheimer analyst Rick Schafer maintained his outperform (buy) rating and $250 price target on the stock, which represents 90% upside for investors compared with Tuesday’s closing price. Schafer cited the pending launch of Nvidia’s GeForce 40 Series, noting that he believes the company’s gaming business is now de-risked, given the recent stock price decline and reset of expectations. More importantly, he believes the current headwinds are transitory and the investing thesis remains intact. 

J.P. Morgan analyst Harlan Sur was also bullish, maintaining his overweight (buy) rating and $220 price target on Nvidia — suggesting potential gains of 67%. He noted that Nvidia continues to be “one to two steps” ahead of the competition in terms of semiconductors, software integration, and ecosystem adoption. 

Finally, Morgan Stanley analyst Joseph Moore maintained his equal weight (hold) rating and $182 price target — representing potential gains of 38%. His “biggest takeaway” from the event was Nvidia’s pricing power, as the company plans to hike prices by roughly 28% on the high-end graphics processing units (GPU) used by gamers. This will likely drive “material” revenue growth and a rebound in Nvidia’s gaming segment, he said. 

Now what

There was other positive developments. Earlier this month, Nvidia stock slumped on news that the U.S. government had imposed restrictions on high-end chip sales to China. In a press conference following GTC, CEO Jensen Huang said he still believes there’s an ample market for data center processors, in spite of the recent limitations. He further noted that the restrictions place specific thresholds on performance, leaving “a large space for us” in China. 

It’s important to note that the data center segment has become an important growth driver for Nvidia. In its fiscal 2023 second quarter (ended July 31), revenue from the segment grew 61% year over year and represented more than half the company’s total revenue. Investors feared the government restrictions would pinch revenue growth, but it turns out the sky isn’t falling and investors should stay the course. 

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Danny Vena has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

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