Oracle's optimism made even skeptics believe in Nvidia. What are they saying now?

Oracle's strong revenue growth outlook has prompted analysts to revise their estimates on the world's largest chipmaker Nvidia. D.A. Davidson analyst Gil Luria, previously cautious in his outlook, upgraded the stock to "buy" and raised his target price, reinforcing investors' belief in long-term demand for AI chips.

D.A. Davidson analyst Gil Luria raised his rating on Nvidia shares from "neutral" to "buy" and increased his target price from $195 to $210, suggesting an upside potential of 18%. His decision was a reaction to Oracle's strong cloud computing outlook, which boosted confidence in the long-term demand for AI chips, Barron 's wrote. Previously, Luria remained one of the few skeptics of Nvidia securities on Wall Street.

"Rising demand for AI computing will provide a sufficient base for Nvidia to maintain its growth momentum next year and likely beyond. Despite uncertainties, they will not change the overall vector," Luria said in a research note.

BNP Paribas analyst David O'Connor expressed a similar stance, saying that Oracle's forecast confirms the long-term demand for GPU (Graphics Processing Unit) computing in AI, both in training and in practical applications. He maintained a "buy" recommendation on Nvidia shares with a target price of $240 - that's 35% above the current market price.

StockStory analysts remind that Nvidia securities remain extremely volatile: they have moved more than 5% up or down 19 times in the last year. The current growth, they say, signals the significance of the news, but does not change the fundamental perception of the business.

For Nvidia investors, the last few years have been a roller coaster ride, analysts at The Motley Fool say. The emergence of AI technology in early 2023 opened up unprecedented opportunities for the chipmaker - and the company has been able to capitalize on them.

Since then, Nvidia's stock has risen more than 1,100%, with revenue up 673% and net income up 1770%, making it the first company in the world to reach a market capitalization of more than $4 trillion, MotleyFool analysts add.

However, in recent months, the narrative that AI adoption is slowing down has gained momentum in the market, and some investors have begun to doubt the long-term prospects. Oracle's strong outlook has dispelled these concerns, analysts say.

Nvidia CEO Jensen Huang previously noted that a 1 GW data center requires about $35 billion in investments in the company's hardware and another $15 billion for additional components. According to him, future "AI superfactories" will need several gigawatts of capacity already, reminds Barron's. Oracle's forecast confirms Huang's words: spending on data centers to support AI could grow from $600 billion in 2025 to $3-4 trillion by 2030.

Increased capital investment by cloud providers directly translates into additional demand for Nvidia chips, which remain the "gold standard" for AI processing in data centers and the cloud, MotleyFool analysts emphasize.

Nvidia shares were adding about 1.7% in Sept. 11 trading after rising 3.9% a day earlier.

Shares of Oracle itself rose sharply by almost 36% in trading on September 10 after upward revision of forecasts due to steady growth in demand for cloud services and AI solutions. In trading on Thursday, investors rushed to lock in profits - Oracle's quotes were down 4.4%.

This article was AI-translated and verified by a human editor