Nvidia rises after signaling longer AI spending runway

Aug 27 (Reuters) - Nvidia shares rose ‌before the ​bell on ​Thursday as investors embraced the chipmaker's strong long-term outlook, betting that a global race to build AI infrastructure will fuel years ‌of rapid growth despite concerns about supply bottlenecks and financial ties ⁠with customers.

Shares rose 6.7% to $223.71 before the bell, putting Nvidia on track to add about $340 ‌billion to its market value.

The ‌world's most valuable company projected 70% revenue growth next fiscal year and forecast current-quarter sales above Wall Street estimates, signaling that the AI spending ​boom remains intact.

The upbeat outlook rippled through global semiconductor markets, sending AI-linked stocks higher in Europe and China and offering fresh ammunition to bulls.

Nvidia's ⁠shares have fallen nearly 12% from their May peak amid growing investor demands for evidence that the ​AI spending boom would endure.

Following the results, at least 10 brokerages raised their price target on the shares, according to data ​compiled by LSEG.

Analysts at Morgan Stanley said, "70% ‌growth supply constrained is a remarkable figure, and to the extent possible we would expect Nvidia to continue to knock ⁠down barriers to higher growth."

The forecast marked a rare long-term outlook from Nvidia, with CEO Jensen Huang saying AI had reached an "inflection point" as the technology moves from ⁠experimentation to real-world deployment.

Nvidia signaled that AI demand is spreading beyond hyperscalers, citing growth from ​AI labs, rising capacity among neo-cloud providers such as CoreWeave and Nebius, and a deeper partnership with Amazon Web Services.

Shares of CoreWeave and Nebius rose 5.8% and 7.2%, respectively.

Morgan ‌Stanley analysts said that Nvidia's push into cloud revenue-sharing could become a fresh catalyst for the stock.

The company reported second-quarter ‌revenue of $96.2 billion, ahead of Wall Street expectations, driven by $89 billion in data center ⁠sales.

The stock trades at 17.9 ‌times forward earnings estimates, ​well below Advanced Micro Devices' 37.2 times and Intel's 46.2 times.

(Reporting by Rashika Singh and Kanishka Ajmera in Bengaluru; Editing by ‌Mrigank Dhaniwala)

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