(Reuters) – Nvidia shares rose more than 3% in hefty volume on Tuesday after two brokerages raised their price targets for the chipmaker, adding to already high expectations ahead of its quarterly earnings report next week.
The world’s most valuable semiconductor company has been at the center of a rebound in technology stocks this year, driven by optimism about the potential of artificial intelligence and demand for components used to power the technology.
More than $22 billion in Nvidia shares were trading as of midday, surpassing the $14 billion in deals in Tesla, which is usually the most traded stock on Wall Street.
“They have to screw it away. That’s the bottom line. The range is so high, and investors look like they’re pushing the bar higher, even in the report,” said Dennis Dick, a trader at Triple D Trading.
Nvidia shares rose 3.5% before paring gains. They last rose 1.7% to $445, bringing gains this week to 9%.
Nvidia was just one of three stocks in the Philadelphia Semiconductor index that traded higher on Tuesday after stronger-than-expected US retail sales data sparked fears that interest rates could remain high for longer, spooking the stock market.
“NVDA literally acts as the ‘kingmaker’ as a huge wave of capital and new financing tools chases new AI software and specialized cloud infrastructure models,” UBS analyst Timothy Arcuri wrote in a research report.
Ahead of Nvidia’s second-quarter fiscal report on August 23, Arcuri raised its price target to $540 from $475, while Wells Fargo increased its price target to $500 from $450. It came after Morgan Stanley on Monday named Nvidia its “top pick.”
“We think it’s hard to bet on NVDA’s prominent position as a primary beneficiary of the AI-driven architectural data center transformation,” Aaron Rackers, an analyst at Wells Fargo, wrote in his research note.
Nvidia stock rose 24% on May 25 after the Santa Clara, Calif., company gave second-quarter revenue forecasts more than 50% above Wall Street estimates due to demand for its artificial intelligence chips, which are used to power ChatGPT and similar services.
Analysts on average expect Nvidia to report a 66% increase in quarterly revenue to $11.13 billion, according to Refinitiv. That compares with Nvidia’s forecast for quarterly revenue of $11 billion, plus or minus 2%.
(Reporting by Noel Randic; Editing by Emilia Sithole Matares)