Shares of Nvidia surged by 6.7%, reaching a record high, following the announcement of the company’s $25 billion stock buyback plan and its strong quarterly revenue driven by robust demand for its AI-focused chips. Nvidia surpassed analysts’ expectations by reporting second-quarter revenue of $13.51 billion and projected that revenue would reach $16 billion in the third quarter. The company also plans to repurchase $25 billion worth of its shares, which is one of the largest buybacks planned in the last decade. As a result, Nvidia’s stock reached $502.66 before slightly retreating to $474.6, still reflecting a year-to-date increase of 230%.
The positive news for Nvidia had a ripple effect on the market, with other chipmakers experiencing a decline in their stock prices as investors shifted their focus to Nvidia. The Philadelphia Semiconductor Index fell by over 3%, and competitors such as Marvell Technology and Advanced Micro Devices dropped by more than 7%, while Intel saw a 4.1% decline. Despite the initial rally triggered by Nvidia’s earnings report, some investors chose to take profits, leading to a 1.36% decrease in the technology-heavy . Michael James, equity trading managing director at Wedbush Securities, attributed the sell-off to the market being in “sell the news” mode, with traders ready to capitalize on initial upswings in stock prices.
Nvidia’s impressive earnings report led to more than 20 brokerages raising their target price for the company. Elazar Advisors set a target of $1,600, and Rosenblatt Securities forecasted a target of $1,100. The median analyst price target for Nvidia has nearly doubled to $600 since May, when the company predicted a 50% increase in second-quarter revenue. The company’s dominant position in the growth of generative AI technology, notably ChatGPT, fueled investor enthusiasm. Nonetheless, short sellers of Nvidia’s stock incurred $826 million in mark-to-market losses on the day of the announcement.
