Nvidia shares rose about 6% before the bell on Thursday as investors embraced the chipmaker's strong long-term outlook, betting that the global race to build artificial intelligence infrastructure will fuel years of rapid growth.
The optimism comes despite concerns over supply bottlenecks and financial ties between Nvidia and its customers. The company's latest forecast also gave investors fresh evidence that the AI spending boom remains intact.
Nvidia projected 70% revenue growth for the next fiscal year and forecast current-quarter sales above Wall Street estimates. As a result, the outlook offered fresh support to investors who had grown increasingly concerned about the durability of AI spending.
Nvidia shares had fallen nearly 12% from their May peak as investors sought clearer evidence that the AI investment boom could continue.
Following the results, at least 10 brokerages raised their price targets for Nvidia shares, according to data compiled by LSEG.
Morgan Stanley analysts described the projected growth as remarkable, particularly given supply constraints. They said they expected Nvidia to continue overcoming barriers to faster growth where possible.
The forecast also marked a rare long-term outlook from Nvidia. Chief Executive Officer Jensen Huang said AI had reached an 'inflection point' as the technology moves from experimentation towards real-world deployment.
Meanwhile, Nvidia indicated that demand for AI infrastructure is broadening beyond hyperscalers.
The company pointed to growth from AI labs, as well as expanding capacity at firms such as CoreWeave and Nebius. It also highlighted a deeper partnership with Amazon Web Services.
Morgan Stanley said Nvidia's expansion into cloud revenue-sharing could provide another catalyst for the stock.
Nvidia reported second-quarter revenue of $96.2 billion, ahead of Wall Street expectations. Data centre sales accounted for $89 billion of that revenue, underlining the continuing importance of AI infrastructure to the company's performance.
The company's valuation also remains below those of some rivals when measured against forward earnings estimates.
Nvidia trades at 17.9 times forward earnings estimates. By comparison, Advanced Micro Devices trades at 37.2 times and Intel at 46.2 times.
The combination of strong projected growth, expanding AI demand and a comparatively lower forward earnings multiple has strengthened the case for Nvidia among investors betting that AI infrastructure spending has further to run.
With inputs from Reuters