Nvidia (NVDA) shares jumped 7.3% to $224.91 in premarket trading on Thursday after the company posted quarterly earnings that finally convinced the market it still has room to grow.

The report marked Nvidia's fifth consecutive earnings cycle, but the first time in that stretch that the stock actually rose in the following session. Each of the previous four reports had resulted in a post-earnings dip. Thursday's premarket gain broke that streak.

Revenue Guidance Drives the Move

The key number behind the rally was revenue guidance. Nvidia projected 70% sales growth for its next fiscal year, while Wall Street had been expecting less than 50%. For a company of Nvidia's scale, guiding roughly 20 percentage points above consensus resets the baseline analysts use to model the business — and it did so in a quarter when the market's central question was whether Nvidia's growth had peaked.

Chief Executive Officer Jensen Huang said sales could double if supply constraints were not holding the company back — a statement that carries weight when it comes from a company already valued at more than $5 trillion. Nvidia, based in Santa Clara, California, designs the graphics processors that serve as the core computing hardware for training and running artificial intelligence models.

Expanded Amazon Partnership Counters Custom-Chip Concerns

One of the ongoing concerns heading into the earnings report was whether Nvidia's biggest customers were moving toward custom chips. The concern was not abstract: the largest cloud providers, including Amazon itself, have been investing in their own in-house AI accelerators as a way to reduce dependence on Nvidia's expensive, supply-constrained hardware. That fear received a direct response in the form of an expanded partnership with Amazon, which operates one of the world's largest cloud computing platforms.

Under the broadened agreement, Amazon will deploy an additional two million Nvidia processors — a headline that quiets the custom-chip narrative, at least for now. The scale of the commitment, measured in millions of processors rather than individual chip orders, also signals how far in advance hyperscale buyers are now planning their AI infrastructure buildouts.

Gross Margins Draw Scrutiny

The report was not without its weak spots. Gross margins are expected to decline in the near term, driven by rising memory prices — an industry-wide cost pressure, as AI data center construction has pushed demand for high-bandwidth memory to the point where memory suppliers have gained pricing power.

Nvidia also drew attention for using its balance sheet to guarantee customer debt and for extending payment terms for some buyers, a practice that critics have called circular financing. Chief Financial Officer Colette Kress pushed back on that framing.

"The equity returns on our invested capital will be excellent," she said.

Hugging Face Acquisition

Beyond the earnings beat, Nvidia confirmed a major strategic move. The company has agreed to acquire Hugging Face, an AI development platform widely used by developers to host, share and deploy open-source models, for $12.9 billion, according to The Information.

The deal would extend Nvidia beyond its core hardware business. Hugging Face sits at the software layer where developers assemble applications on top of open-source models, and acquiring it would give the chipmaker a direct stake in the developer ecosystem that surrounds its processors rather than selling compute alone.

Nvidia did not immediately respond to a request for comment on the deal early Thursday.

Analysts Lift Price Targets

UBS analyst Timothy Arcuri raised his price target on NVDA to $300 from $280 following the results, keeping a Buy rating in place.

Arcuri noted that Nvidia's guidance for calendar 2027 implies earnings per share above $16, even with gross margin pressure from memory price inflation. UBS estimates that Nvidia is on track to ship around 13 gigawatts of compute capacity this year.

Several other analysts also moved their targets higher. Raymond James lifted its price target to $515 with a Strong Buy rating. Cantor Fitzgerald kept an Overweight rating and a $350 target, noting that Nvidia's Compute segment is currently sold out. Rosenblatt raised its target to $390, while Argus reiterated its Buy rating.

UBS added that demand still far exceeds the guidance figure and that there is room to raise estimates further if supply and data center capacity allow. That supply picture, together with memory-driven margin pressure, sets the agenda for the quarters ahead: whether manufacturing and data center capacity remain the binding constraint on Huang's doubling scenario, and how the Hugging Face acquisition, once completed, extends Nvidia's reach into the software side of the AI stack.