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Nvidia stock soars on earnings, AI developments

Yahoo Finance Live's Akiko Fujita and Seana Smith discuss Nvidia stock soaring amid the company's earnings report, other chip stocks, and AI development.

Video transcript

AKIKO FUJITA: The stock story of the day, Nvidia. The chip giant soaring on earnings and revenue guidance that blew past Wall Street expectations. At the core of the optimism is AI. Right now, Nvidia is the leader in the market for chips that power artificial intelligence. You're looking at the stock. They're up 25% right now on track for its best day since November of 2016.

And Seana, for those who are sort of now looking at the same way, why all about Nvidia? We're talking about the GPUs. They're highly specialized chips that are really the building blocks for this latest advancement we have seen in AI over the last six months. I've been looking at some of these analysts calls on the stock, incredibly bullish. HSBC and Rosenblatt Securities most bullish for $600 a share.

And there's a number of things that we've heard from analysts today that really point to this exuberance. Some would argue maybe a little irrational, but Truist upping its price target to $470 a share, calling the stock's upside "stunning." Susquehanna calling this a gold rush in AI, with NVIDIA selling the picks and shovels. And that's all contributing to this huge rally we're seeing today.

SEANA SMITH: It certainly is, and we're talking about a stock that was already up over 100% ahead of the results, since the start of the year, ahead of the results that we got last night. So talk about some of the excitement that's playing out in the market. We're not only seeing this in Nvidia, yes, a massive gain there, but a number of stocks that do have exposure to AI are also riding this wave and this excitement here to the upside. We have AMD, Micron both having exposure to AI. They're in the green today. Google and Microsoft, when we talk about that ChatGPT or the generative AI exposure there, those two stocks moving to the upside. And Palantir and Arista Networks are also among the gainers today.

Akiko, you were talking about some of the analyst commentary that we're getting. A lot of this comes back to what we heard from NVIDIA when it comes to their guidance. And Bank of America was out with a note today, talking about the significance of that guidance raised. The company now expecting $11 billion in sales for the second quarter. But Bank of America in their note saying that they've never seen in their coverage anything like this, and that its market cap is on the path to 1 trillion, not too far from that today, and beyond.

So certainly, a lot of hype here about what we've just heard from NVIDIA, but not just that-- really about what the company could potentially look like because of the developments in AI a few years down the road.

AKIKO FUJITA: Yeah, and Seana, we can trace all the excitement around AI back to November of last year when we saw this release of ChatGPT. Investors, for months now, trying to figure out how to position themselves for what they see as transformational technology. There's an interesting study I want to point to here from NBER that talks about where the upside could be in AI. They specifically looked at the exposure a company's workforce has to AI and said, when you calculate that, the excess returns are 0.4% higher on a daily basis. You see IBM there at the top of the list, Nvidia rounding out the top five, but certainly, investors going to continue to seek for any kind of return on AI, as we see this hype grow more and more.

SEANA SMITH: Yeah, look at those price targets. Certainly, a lot of excitement about what we heard last night about what we could potentially see here going forward.