Nvidia extends gains as Wells Fargo, UBS lift price targets into Q2 earnings

Updated at 7:12 am EDT

Nvidia  (NVDA) - Get Free Report shares extended gains in pre-market trading after a pair of Wall Street firms boosted their price target on the chipmaker heading into its second quarter earnings report later next week.

UBS analyst Timothy Arcuri, who carries a 'buy' rating on the stock, increased his price target by $65, to $540 per share, calling Nvidia a 'kingmaker' in the AI chip sector. 

"Demand will dictate Nvidia's long-term AI revenue opportunity, but supply should be the primary determinant for its data center revenue at least through C2024," Arcuri said. "Nvidia is quite literally serving as 'kingmaker' as a huge wave of capital and new financing vehicles are chasing new AI software and specialized cloud infrastructure models while enterprises are still very early in a struggle to access enough capacity to build out AI at scale."

Wells Fargo, meanwhile, added $50 to its objective, taking it to $500 per share, as analysts add to the Street's bullish outlook for AI chip demand, a segment in which Nvidia has a large and growing lead, over the second half of the year.

Securities and Exchange Commission filings published late Monday also showed that billionaire investor Dan Loeb, through his Third Point LLC hedge fund, added 500,000 Nvidia shares over the second quarter. 

Nvidia shares were marked 1.4% higher in pre-market trading to indicate an opening bell price of $443.59 each, following on from a 7.1% gain over the Monday session that was linked to a note from Morgan Stanley.

Morgan Stanley analyst Joseph Moore, who carries an overweight rating and $500 price target on the stock, said a "fairly exceptional" supply-demand imbalance in the artificial-intelligence-chip sector, as well as a massive shift in spending toward the emerging technology, is likely to persist over the near term.

Nvidia will report its second-quarter earnings after the close of trading on Wednesday Aug. 23, with earning indications suggesting it will report a bottom line of $2.07 per share on revenue of $11.131 billion.

Earlier this spring, forecast current-quarter revenue of around $11 billion, more than 50% ahead of Wall Street estimates, with a gross margin of around 70%. That likely equates to earnings in the region of $2.04 a share.

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