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Sunday, June 11, 2023

Last Minute Thought: Buy or Sell Nvidia Before Earnings?

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After a bearish period, the crypto market is on the up again, but the segment’s volatility remains an issue for those mindful of its impact on Nvidia (NVDA). However, ahead of the chip giant’s July quarter results this evening, Rosneblatt analyst Hans Mosesmann thinks these worries are overblown.

“Although crypto continues to be an area of concern for investors (crypto mining contributed $155 million in revenue in the April quarter and CMP revenues are expected to be $400 million in the July quarter), we believe the company has had success in mitigating RTX GPUs in crypto mining by limiting performance in such workloads,” the 5-star analyst said. “This points to a much more benign Crypto cycle this go-around, we believe.”

In fact, Mosesmann expects “strength across the board,” with a particularly robust showing from Nvidia’s two main revenue drivers, Gaming and Data Center. The analyst anticipates the quarter’s sales will better both his and the consensus estimates of low double-digit sequential growth.

Outsized growth is expected to be on the menu for the company’s October quarter guidance too, and Mosesmann thinks the outlook will improve upon his and the Street’s estimate of mid-single-digit quarter-over-quarter growth for the top-line and EPS of $1.05/$1.06, respectively.

More ray tracing adoption, “continued momentum” in the Automotive segment and healthy data center sales from the “continued adoption of Ampere and hyperscaler spending” are expected to drive the gains.

On the earnings call, Mosesmann will be looking for details on the progress regarding the Grace CPU/3-product strategy, and more color on the ongoing ARM acquisition shenanigans. Nvidia has also said it anticipates supply constrains will remain into the second half of the year, so more info regarding this issue will also be welcome.

All in all, Mosesmann remains keen on all things Nvidia. “We continue to like the Nvidia story and see the company as the best-in-class AI play with growth vectors into next generation networking/DPU adoption and early-days of autonomous driving S/W kicker,” the analyst summed up.

Unsurprisingly, then, Mosesmann sticks to a Buy rating and backs it up with a $250 price target. Investors are looking at returns of 25% from current levels. (To watch Mosesmann’s track record, click here)

Nvidia gets a lot of love from Wall Street’s analyst corps; the stock has a Strong Buy consensus rating with only 1 out of 29 recent reviews suggesting to Hold and all others recommending to Buy. After this year’s mighty share haul (up 50%), the stock has ~10% upside before it reaches the $212.29 average price target. (See NVDA stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post Last Minute Thought: Buy or Sell Nvidia Before Earnings? appeared first on TipRanks Financial Blog.

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