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Will Nvidia shares’ bull-run continue?

Nvidia shares are up sharply following its AI conference. Will they continue to rise?

NVIDIA shares jumped 10% on Thursday and a further 9% on Friday after the US graphics card maker said it may collaborate with rival Intel to produce semiconductor chips.

The Nasdaq-quoted artificial intelligence company said it may be joining forces with the chipmaker to overcome the current chip shortage. Shares in Intel also rose 6.9%.

"They're interested in us using their foundries,” Nvidia chief executive Jensen Huang told investors at its conference this week. “We're very interested in exploring it… I'm encouraged by the work that is done at Intel. I think that this is a direction they have to go and we're interested in looking at the process technology.

"With respect to Intel, foundry discussions take a long time. And it's not just about desire, but we have to align technology. The business models have to be aligned. The capacity has to be aligned. The operations process and the nature of the two companies have to be aligned. It takes a fair amount of time, and it takes a lot of deep, deep discussion." he added.

Nvidia’s share price has increased by 20% this week alone due to a drip-feed of positive news flow from its GTC keynote conference on artificial intelligence.

Nvidia abandons Arm acquisition

The Californian company, which produces graphics processors used in artificial intelligence systems, recently ditched plans to buy UK chipmaker Arm Holdings due to pressure from regulators. However, this week it launched a new CPU super-chip based on Arm technology.

Nvidia is America’s biggest chipmaker by market capitalisation and analysts at Needham think it could become its first trillion-dollar semiconductor manufacturer.

“They’re out there creating new markets… and they’ve been delivering against those ideals,” Stacy Rasgon, a semiconductor sector analyst at Bernstein Bank, told CNBC. “They need to keep the dream alive.”

Rasgon believes the opportunity for Nvidia’s chips in data centers is “massive,” while the market for them in the metaverse may also be worth “many billions of dollars.”

Can Nvidia’s bull-run continue?

At the full-year results in February, full-year revenues rose 61% to $26.9bn, while fourth-quarter sales increased by 53% to $7.6bn. Net income also rose 125% to $9.8bn from $4.3bn in 2021. Nvidia also paid a dividend of 4c a share. The company expects revenues of $8.10 billion, plus or minus 2%, for the first-quarter of 2023.

Meanwhile, Huang says it is seeing “exceptional demand” for its computing platforms… propelling advances in AI, digital biology, climate sciences, gaming, creative design, autonomous vehicles and robotics” and “excellent traction with our new software business models with NVIDIA AI, NVIDIA Omniverse and NVIDIA DRIVE.”

Nvidia shares are up an impressive 123% in a year to $281.5 but are still down 16% from their November highs of $334. As momentum continues to remain behind the company - barring any bad news - it looks like the bull-run should continue.

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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