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Here's Why NVIDIA Stock Jumped Today

By Joe Tenebruso - May 28, 2021 at 7:28PM

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The bulls are taking the reins once again.

What happened

Shares of NVIDIA (NVDA -0.80%) climbed 5% on Friday, as investors grew more optimistic about the chipmaker's growth prospects. 

So what 

NVIDIA delivered impressive growth in its fiscal 2022 first-quarter results on Wednesday. Its revenue surged 84% to $5.66 billion, fueled by a 106% rise in gaming sales and a 79% jump in data center revenue. Its earnings per share, in turn, soared 106% to $3.03. 

Yet despite the impressive performance, the semiconductor titan's stock fell 1.4% on Thursday. 

A person is pointing to a digital stock chart that rises, then falls, then rises again.

Image source: Getty Images.

However, multiple analysts raised their price targets for NVIDIA's stock following its first-quarter report. For one, Bank of America analyst Vivek Arya boosted his price forecast from $700 to $750 and reiterated his buy rating on NVIDIA's shares. Arya posits that the tech leader can grow its revenue and profits by 20% and 25%, respectively, until at least 2025. 

On Friday, investors appeared to reconsider the arguments posed by these analysts and take a more bullish view of NVIDIA's expansion potential. And they bid up its stock price in kind.

Now what 

NVIDIA is producing a staggering level of growth for a $400 billion business. And its sales and earnings should continue to grow at an impressive clip in the coming years, driven by robust demand from the cloud computing and video game markets. Thus, Friday's gains may be just the beginning of a far larger long-term move in NVIDIA's stock price.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NVIDIA. The Motley Fool has a disclosure policy.

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