Nvidia Analysts Hail 'Jaw Dropper' Q3, But Downplay China Setback To Focus On Bigger Picture: 'This Is A 1995 Moment'

Nvidia Corp.’s NVDA third-quarter earnings report may not have wowed investors but it has struck a chord with sell-side analysts.

Ives Lauds ‘Jaw Dropper Numbers:’ “The Godfather of AI Jensen [Huang] and Nvidia does it again,” said Wedbush analyst Daniel Ives on X following the company’s quarterly results.

“Anyone that says AI is hype look at these jaw-dropper numbers from the Godfather,” the tech bull said. The analyst sees the AI revolution benefitting the tech sector into 2024.

Nvidia’s quarterly numbers suggest the AI revolution is getting entrenched and tell what would be coming to software, enterprise, and consumer tech in 2024, Ives.

Calling the current AI developments the first derivative, he said the focus now shifts to the second, third, and fourth derivatives. “This is a 1995 Moment,” he said, referring to the period when the internet began to have a far-reaching impact on businesses and society.

KeyBanc Encouraged By Results: Delving into Nvidia’s upbeat third-quarter results and fourth-quarter guidance, KeyBanc Capital Markets analyst John Vinh noted that generative AI demand remained strong across cloud service providers, consumer internet, and enterprises.

Data Center compute revenue quadruped year-over-year, with inference now emerging as a major demand driver, the analyst said.

The GH200 Grace Hopper super chip platform  Nvidia began shipping this quarter, will likely generate multibillions in revenues, Vinh said.

See Also: Best Artificial Intelligence Stocks

Looking ahead, Nvidia said it expects Data Center capacity will continue to grow throughout 2024, the analyst noted. He also noted the company’s comments that fourth-quarter sales to China and other impacted regions, historically representing 20-25% of its total data center revenue, would fall significantly.

Nvidia, however, looks to backfill with strong demand from the rest of the world even as it is working on compliant alternatives and collaborating with some customers to obtain licenses, the analyst said.

“We’re encouraged by these strong results and view NVDA as best positioned to monetize Gen AI in semis,” Ives said. He maintained an Outperform rating and a $650 price target for Nvidia shares.

CEO Makes Compelling Case, Says Munster: Nvidia’s Huang sees Data Center growing through 2024, given supply constraints will likely ease in the months ahead and expected growth in the enterprise segment, said Deepwater Asset Management Managing Partner Gene Munster.

The CEO’s growth comment was expected, potentially explaining a lack of stock reaction after the earnings call, he said. “Even after factoring in Jensen’s biases, his case for the AI party to continue through 2025 is compelling,” he added.

The venture capitalist also noted that CFO Colette Kress said on the call the guidance for the January quarter would have been higher if not for the China regulation headwind.

Munster, however, is positive on Nvidia. The “big picture” is that no one can touch Nvidia’s GPUs or CUDA toolkit and these components are needed to build AI infrastructure, the fund manager said.

“I believe the level of investment from both big and small companies related to AI in the next five years will exceed the hype and benefit Nvidia’s business,” he added.

Nvidia Price Action: Nvidia stock fell 1.74% to $490.75 in after-hours trading on Thursday in reaction to the company’s quarterly results, according to Benzinga Pro data.

Read Next: Elon Musk Wowed By Tesla Supplier Nvidia’s Insane Revenue Jump In Just 6 Months