'Unprecedented' and 'unfathomable.' Nvidia makes jaws drop on Wall Street as stock explodes higher.

By Emily Bary

Analysts were awestruck in describing Nvidia's latest outlook, with one musing that it could have marked the 'greatest beat of all time'

Unprecedented. Cosmological. Unfathomable.

Those are just some of the ways that awestruck analysts described Nvidia Corp.'s (NVDA) latest bout of quarterly guidance. The chip maker said it expects $11 billion in revenue for the current quarter, an outlook that far surpasses the prior $7.2 billion consensus view and that would blow out of the water Nvidia's previous quarterly revenue record of $8.3 billion.

See more: Nvidia stock soars toward all-time high as record revenue forecast backed by 'killer app' of AI

"In the 15+ years we have been doing this job we have never seen a guide like the one NVDA just put up with FQ2 outlook that was by all accounts cosmological, and which annihilated expectations," Bernstein analyst Stacy Rasgon wrote in a note to clients following Wednesday's report.

Nvidia shares have enjoyed a massive recent run -- rising 109% over the course of 2023 as of Wednesday's close -- on the heels of optimism about the company's ability to capitalize on the artificial-intelligence boom. Nvidia's management showed it expects the AI hype to translate to serious revenue, and quickly.

"Tactically the only question that really matters is whether the new datacenter trajectory represents a new normal run-rate or a surge on the back of generative AI hype," Rasgon continued. "However, at least in the near to medium it does appear to be sustaining (at least through the year) and we would note that a one-year cycle around a new architecture would actually be an anomaly."

Nvidia's stock gained another 24% in Thursday's session, putting a $1 trillion valuation in sight.

Don't miss: After Nvidia's blowout guidance, here is the percent of revenue other companies will get from AI this year

Rasgon noted that Wall Street has been looking for cheaper AI plays than Nvidia shares in light of this year's strong rally, but maybe they shouldn't look any further.

"Perhaps NVDA itself is the best way to accomplish that (while still undeniably pricey it is clearly not quite as expensive as it looked) and the narrative, backed up by actual products and sales, still has legs in our opinion," he wrote, while keeping his outperform rating and boosting his target price to $475 from $300.

Raymond James analyst Srini Pajjuri also heaped on effusive praise as he called Nvidia's outlook "unprecedented."

"To say that NVDA's outlook exceeded even the most bullish expectations is an understatement, in our view," Pajjuri wrote.

Nvidia CFO on record-breaking forecast: 'The inflection point of AI is here'

The question now is whether Nvidia's momentum is sustainable, but he said that "management appears to have solid 2H visibility in data center, and is procuring substantially larger supply for the next few quarters." The generative-AI rush also seems to fueling strong demand for Nvidia's full stack, in his view.

Pajjuri had a strong buy rating on the shares and lifted his price target to $450 from $290.

Susquehanna Financial Group's Christopher Rolland, meanwhile, asked whether Nvidia delivered the "greatest beat of all time" with its outlook.

He called the upside "unfathomable" as Nvidia capitalizes on generative AI and an inflection in accelerated computing. "It looks like the new gold rush is upon us, and NVIDA is selling all the picks and shovels," he wrote, while keeping a positive rating on the shares and raising his target price to $450 from $350.

See also: Why Nvidia and other 'picks and shovels' of tech will stay solid bets, say these veteran investors

-Emily Bary

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05-26-23 0823ET

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