A day before Nvidia’s Wednesday release of results showing new record-high revenues for the fourth-quarter of its fiscal year ending January 28, record-high revenues for the entire fiscal year, plus quarterly earnings that beat analyst expectations, Scott Rubner, a managing director with Goldman Sachs, declared the Silicon Valley-based microprocessing-turned-artificial intelligence (AI) giant “the most important stock on planet Earth” because of how its numbers move the broader financial market.

This week, at least, it’s hard to argue with Rubner.

Nvidia shares rose 13% on Thursday, from $694.52 to $785.38, after the company—whose presence in the life sciences continues to grow—reported sky-high earnings of $12.285 billion for the fourth quarter of its 2024 fiscal year, up more than eight-fold from $1.414 billion in Q4 2022. Nvidia’s full-year 2023 earnings rose to another all-time high of $29.76 billion, nearly seven times (581% above) the $4.368 billion in earnings racked up in 2022.

Nvidia’s numbers propelled it Thursday to the market’s all-time highest-ever market capitalization—the product of the share price and the number of outstanding shares—of $1.92 trillion, compared with $1.788 trillion for Google parent Alphabet and $1.238 for Facebook parent Meta. The overall Dow Jones Industrial Index rose 1% today, to $39,069.11.

Even more enticing to investors: Nvidia’s diluted earnings per share multiplied more than eight-fold, zooming 765% to $4.93 per share (7% above the analyst consensus of $4.60) from 57 cents a share a year earlier.

Results like these, and the anticipation of even better numbers in the months ahead as the AI boom continues, explains why since the start of 2024, Nvidia shares have rocketed 61%, from a close of $481.68 on January 2.

“Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations,” Jensen Huang, Nvidia’s founder and CEO, said in a statement.

Nvidia’s revenue more than tripled during the Q4 of FY 2024, leaping to $22.103 billion—8% above the $20.4 billion predicted by a consensus of analysts cited by Bloomberg News—compared with $6.051 billion a year earlier. Full fiscal year 2024 revenue more than doubled, leaping 126% to $60.922 billion from $26.974 billion in FY 2023.

“Very high bar”

“Nvidia delivered against what was seemingly a very high bar with Data Center once again serving as the key growth driver,” another Goldman Sachs analyst, Toshiya Hari, wrote after the release of results. Hari raised the firm’s 12-month price target on Nvidia shares by 9%, from $800 to $875, maintaining its “Buy” rating.

Nvidia’s Data Center division accounted for the company’s largest portion of sales (83%), reporting $18.4 billion in fiscal Q4 revenue, more than quintuple (up 409%) its year-ago revenue.

“Our Data Center platform is powered by increasingly diverse drivers—demand for data processing, training and inference from large cloud-service providers and GPU-specialized ones, as well as from enterprise software and consumer internet companies. Vertical industries—led by auto, financial services and healthcare—are now at a multibillion-dollar level,” Huang stated.

Hari said Goldman Sachs has modeled another greater than two times year-over-year increase in Data Center revenue during FY 2025: “We expect not only sustained growth in Gen AI infrastructure spending by the large [communication service providers] and consumer internet companies, but also increased development and adoption of AI across enterprise customers representing various industry verticals and, increasingly, sovereign states,” Hari wrote.

The largest target price increase at deadline came from Cody Acree, semiconductor analyst at Benchmark, who raised his firm’s target 60% from $625 to an even $1,000, while maintaining its “Buy” rating.

Other price target hikes today:

  • Chris Caso (Wolfe Research)—Up 43% from $630 to $900; maintains “Outperform” rating.
  • Tristan Gerra (Baird)—Up 40%, from $750 to $1,050 maintains “Outperform” rating.
  • William Stein (Truist Securities)—Up 32% from $691 to $911; maintains “Buy” rating.
  • Harlan Sur (J.P. Morgan)—Up 31% from $650 to $850; maintains “Overweight” rating.
  • Matthew Ramsay (TD Cowen)—Up 29% from $700 to $900; maintains “Outperform” rating.
  • Ross Seymore (Deutsche Bank)—Up 29% from $560 to $720; maintains “Hold” rating.
  • Vivek Arya (B of A Securities)—Up 16% from $800 to $925; maintains “Buy” Rating.
  • Matthew (Matt) Bryson (Wedbush Securities)—Up 6%, from $800 to $850; maintains “Outperform” rating.
  • Joseph Moore (Morgan Stanley)—Up 6% from $750 to $795; maintains “Overweight” rating.
  • Frank Lee (HSBC)—Up 5% from $835 to $880; maintains “Buy” rating.
  • Ruben Roy (Stifel)—Up 5% from $865 to $910; maintains “Buy” rating.
  • Vijay Rakesh (Mizuho)—Up 3% from $825 to $850; maintains “Buy” rating.

However, UBS’ Timothy Arcuri cut his firm’s price target on Nvidia 6%, from $850 to $800, citing a potential slowing in revenue growth in coming months while maintaining his firm’s “Buy” rating.

“There were a few items that could maybe suggest some slowing revenue growth on the horizon (mostly supply and opex [operating expenses]) but we will have to see how these evolve,” Arcuri wrote in a research note. “The bottom line is that we are still in such early stages of what is possible with AI (especially health care/drug discovery) and NVDA is the de-facto global AI platform, it seems too soon to take a more cautious view.”

Huang cited Nvidia’s launch of an AI drug discovery partnership with Recursion, announced last month at the 42nd Annual J.P. Morgan Healthcare Conference, in which Recursion announced it will be the first hosting partner of Nvidia’s to release a potential series of AI foundation models for external use, to be hosted on Nvidia’s BioNeMo generative AI cloud-based platform designed to enable faster discovery and design of drugs.

Play on words

Recursion’s series is called “Phenom,” a play on the words “phenomenal” and “phenomics,” the latter being the systematic study of a cell’s phenotype in response to many different chemical or genetic perturbations.

BioNeMo is a generative AI service designed to develop, customize and deploy AI foundation models for computer-aided drug discovery. According to Nvidia, BioNeMo features a growing collection of pre-trained Biomolecular AI models that can be applied to the end-to-end drug discovery processes.

In a research note Wednesday, Gerra added: “Nvidia’s NeMo framework helps enterprise customers customize their inference models by integrating all the open-source LLMs. As a result, enterprise demand for Nvidia’s AI solutions is now significantly picking up notably in the banking, manufacturing, and healthcare segments.”

Nvidia includes within “healthcare” biotech and the life sciences, where the company has capitalized on the transformation of drug discovery wrought by AI.

Nvidia’s rapid growth can be seen in its 13% year-over-year increase in the size of its workforce. The company finished FY 2024 on January 28 with approximately 29,600 employees in 36 countries, of which 22,200 were engaged in research and development and 7,400 were engaged in sales, marketing, operations, and administrative positions. At the close of FY 2023, the company employed 26,196 people in 35 countries, of which 19,532 were engaged in research and development and 6,664 were engaged in sales, marketing, operations, and administrative positions.

During fiscal Q4, according to the Form 10-K, Nvidia’s Data Center revenue grew through the launch of AI inference platforms that combine the company’s full-stack inference software with NVIDIA Ada, NVIDIA Hopper and NVIDIA Grace Hopper processors optimized for generative AI, large language models (LLMs) and other AI workloads. The company also introduced NVIDIA DGX Cloud and AI Foundations to help businesses create and operate custom LLMs and generative AI models.

Also, in guidance to investors, Nvidia projected that revenue will rise to $24 billion for the first fiscal quarter of 2025, which covers February-April of this year.

“We had never seen $2 bn+ of upside to quarterly revenue guidance until Nvidia did it a few quarters ago, but it has become routine during the AI surge,” Moore of Morgan Stanley and colleagues wrote in a research note.

Robust growth prediction

During the earnings call with analysts, Huang predicted robust growth of recent quarters would continue for two reasons: Data centers are shifting from general-purpose to accelerated computing, which is enabling generative AI, which in turn is enabling a whole new industry to emerge.

“This last year, we’ve seen generative AI really becoming a whole new application space, a whole new way of doing computing, a whole new industry is being formed and that’s driving our growth,” Huang explained. “A whole new industry in the sense that for the very first time a data center is not just about computing data and storing data and serving the employees of a company. We now have a new type of data center that is about AI generation, an AI generation factory.”

These “factories” transform the raw material of data, using AI supercomputers such as those that Nvidia builds, and turns it into valuable “tokens” that users experience on platforms like ChatGPT or Midjourney, Huang continued: “All of your recommender systems are now augmented by that, the hyper-personalization that goes along with it. All of these incredible startups in digital biology, generating proteins and generating chemicals and the list goes on.”

AI growth will also continue, he said, as public and private users data seek to harness that material in ways that apply the language, the knowledge, the history, the culture of each region of the world: “They want to protect the data. They want to transform it themselves, value-added transformation into AI and provision those services themselves. So we’re seeing Sovereign AI infrastructure is being built in Japan, in Canada, in France, so many other regions. And so my expectation is that what is being experienced here in the United States, in the West, will surely be replicated around the world, and these AI generation factories are going to be in every industry, every company, every region.”

“Fundamentally, the conditions are excellent for continued growth calendar ’24, to calendar ’25 and beyond,” Huang added.

Leaders & Laggards

  • Emergent BioSolutions (EBS) shares rocketed 78% on Wednesday, from $1.52 to $2.71, after the company announced its appointment of Joseph C. Papa as president and CEO, effective that day. Papa is a 35-year healthcare and pharmaceutical industry veteran who most recently served as president and CEO of Bausch and Lomb, leading the company through its $630 million IPO, and earlier served as chairman and CEO of Perrigo. Papa succeeds interim CEO Haywood Miller, who held the position since June 2023 following the retirement of President and CEO Robert G. Kramer Sr.
  • Novavax (NVAX) shares climbed 23% on Thursday, from $3.98 to $4.88, after settling its arbitration dispute with Gavi, the Vaccine Alliance (Gavi) over an agreement that Novavax terminated in November 2022. Gavi agreed to procure 350 million doses of Novavax’s COVID-19 vaccine on behalf of the COVAX Facility, which works to distribute COVID vaccines in lower-income countries. Novavax has made an initial $75 million payment to Gavi and agreed to pay $80 million annually through December 31, 2028. Novavax’s annual cash obligation would be offset or reduced under an $80 million annual vaccine credit toward sales of any Novavax vaccines funded by Gavi for supply to lower-income countries. Novavax also agreed to provide an additional vaccine credit of up to $225 million should there be additional demand.
  • RAPT Therapeutics (RAPT) shares cratered 73.5% on Tuesday, from $25.97 to $6.87, after the company acknowledged the FDA imposed a clinical hold on the company’s Phase IIb trial of zelnecirnon (RPT193) in atopic dermatitis and Phase IIa trial of the drug in asthma. The hold was imposed following a serious adverse event of liver failure in one patient in the atopic dermatitis trial, “the cause of which is currently unknown but which has been characterized as potentially related to zelnecirnon,” RAPT said. Dosing of zelnecirnon has been halted in both trials, as has enrollment of new trial participants. RAPT said the patient had “a complex medical history, including a history of drug allergy to dupilumab, autoimmune disease resulting in thyroid hormone replacement therapy and use of an herbal supplement known to be associated with liver failure, as well as a reported COVID-19 infection during the time of the event.”
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