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Nvidia shares surge on signs of machine learning boom

Fri 14th February, 2020 1:29pm
Feb 14 (Reuters) - Shares of Nvidia Corp  NVDA.O  rose 6% on
Friday after the chipmaker stunned analysts with strong
quarterly results and joined rivals Intel Corp  INTC.O  and
Advanced Micro Devices Inc  AMD.O  in predicting strong demand
for chips used in the latest generation of data centers and AI.
    At least eleven brokerages hiked price targets on the
company's stock. Brokerage Cowen & Company was the most bullish,
raising its target by $85 to $325, higher than Wall Street's
median price target of $285.15 and Friday's pre-market price of
around $287. 
    Analysts at Susquehanna said while they had expected the
company to beat market consensus expectations thanks to the data
center demand, they had never expected this kind of upside.
    "Nvidia's dream-a-dream AI story is solidly back on track,"
analysts from the brokerage said in a note to clients. 
    Chipmakers have had a rollercoaster ride over the past two
years, with Donald Trump's trade war with China and the fading
of a boom in mobile phone development and sales eating into
growth. New markets in self-driving cars, internet of things
appliances and the huge data centers needed to drive booming
e-commerce and new online functionality, by contrast, are still
developing. 
    Sales from Nvidia's data center business, which serves
clients developing products related to artificial intelligence,
surged 43% in the fourth quarter to $968 million. Jefferies
analysts projected a 34% jump overall this year.
    The chipmaker also forecast first-quarter sales above
estimates, even as it expected a $100 million hit from the
coronavirus outbreak. The strong forecast also helped fuel
expectations of a rebound in chip demand.  urn:newsml:reuters.com:*:nL1N2AD26Q  
    "With solid product cycles in Gaming and sustainable strong
demand from Data Center customers, we continue to see an upward
bias in revenues, margins, and earnings as we move through
FY21," J.P. Morgan analysts wrote in a note.
    Nvidia was the second chipmaker after Qualcomm Inc  QCOM.O 
to warn of the potential impact on its business of the
coronavirus outbreak, which has left Chinese companies
struggling to restart production after an extended new year
holiday.
     Cowen analysts said Nvidia was also benefiting from pent-up
demand following under-investment from cloud customers in the
first half of 2019 and accelerating demand for conversational AI
- where computers engage in human-like dialogue.

 (Reporting by Akanksha Rana in Bengaluru)
 ((akanksha.rana@thomsonreuters.com; within U.S. +1 646 223
8780, outside U.S. +91 80 6749 1130; Twitter: @AkankshaRanaa;))
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