Why Nvidia Stock Jumped 29% in February

Nvidia's (NASDAQ: NVDA) breathless rise continued last month as the artificial intelligence (AI) chip maker benefited from more signs that demand for AI infrastructure is still soaring. The company also delivered its own stellar earnings report, contradicting any naysayers who expected Nvidia's growth to finally begin moderating.

According to data from S&P Global Market Intelligence, the stock finished February up 28.6%. As you can see from the chart below, Nvidia gained in the first half of the month on continued excitement over AI chips, and then, after a brief pullback, surged on its earnings report on Feb. 21.

NVDA Chart

NVDA data by YCharts

Analysts are still underestimating Nvidia

Nvidia shares rose through the first half of the month as strong earnings reports from AI stocks like Meta Platforms and Arm Holdings signaled that demand and interest in AI remained robust and growing. Meanwhile, investor demand for AI stocks continued to send prices in the sector soaring.

There was also some noteworthy reporting on Nvidia, including that it's creating a new business to target custom AI chips for cloud computing companies and others, which could be a way of strengthening its competitive advantage in the space.

Nvidia also benefited from a series of price target hikes from Wall Street as the consensus on the stock remains overwhelmingly bullish.

A Wells Fargo note on Nvidia peer Super Micro Computer threw some cold water on the AI rally, but Nvidia shares jumped 16% on Nov. 22 after the company delivered another blowout earnings report.

Revenue skyrocketed 265% to $22.1 billion, ahead of estimates at $20.4 billion, and was paced by a 409% surge in data center revenue to $18.4 billion. Adjusted earnings per share jumped 486% to $5.16, which also beat the consensus at $4.60.

The company's guidance impressed as well, calling for $24 billion in revenue in the first quarter, well ahead of the consensus at $21.9 billion, and management sees margins continuing to expand.

An Nvidia H100 superchip.

Image source: Nvidia.

Nvidia can still go higher

The AI stock jumped out of the gate in March as well after another stock delivered a bullish report for the sector. This time it was Dell Technologies that said it's starting to see soaring demand for its AI servers.

Thus far, the evidence shows that the AI boom is still picking up speed, and Nvidia remains in the driver's seat. Don't be surprised to see the stock deliver further gains in the coming months as cloud infrastructure companies and others race to build out new AI capabilities.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of February 26, 2024

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Jeremy Bowman has positions in Meta Platforms and Wells Fargo. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool recommends Super Micro Computer. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.