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ETF PM has long positions in Nvidia (NVDA).
Nvidia Rakes In Record Sales, But Intel-Mobileye-BMW Rivalry Looms
Allison Gatlin, 8/12/16
Facebook (FB), Microsoft (MSFT) and Amazon.com (AMZN) helped Nvidia (NVDA) grow “a second leg to run on” outside gaming, analysts said Friday, after the Tesla Motors(TSLA) partner reported 110% growth in fiscal Q2 data center sales.
IBD 50 stock Nvidia rocketed to a record high for the sixth straight trading day, closing up 5.6% to 63.09 on the stock market today. Shares are up more than 80% this year.
But Needham analyst Rajvindra Gill says Nvidia stock is trading at a premium. To justify that, Gill says he would need to see 15%-20% core growth in 2017, but he only models 11%. He retained his hold rating on Nvidia stock.
Others were more bullish. “Tough to find much (bearish) to pick on here,” Canaccord analyst Matt Ramsay said of Nvidia’s fiscal Q2. Ramsay kept his buy rating on Nvidia stock but boosted his price target to 70 from 67.50.
“We maintain our belief that Nvidia’s transformation from a PC-leveraged GPU supplier to a diverse visual-computing company is essentially complete,” he wrote in a research report.
For fiscal Q2 ended July 31, Nvidia reported 40 cents earnings per share on record sales of $1.43 billion, up a respective 700% and 24% vs. the year-earlier period. Those metrics easily topped analysts’ model for 37 cents and $1.35 billion.
Nvidia’s gaming unit brought in $781 million, growing 18%. There, Nvidia still has a major runway with the new Pascal 1070/1080 GPUs still “an immaterial percentage” of the mix, and the circa-2015 Maxwell predecessor only at 33%, Mizuho analyst Vijay Rakesh says.
Gaming units have grown at a 9% compound annual growth rate over the past five years. Meanwhile, average sales prices have surged 11%, Rakesh wrote in a report. He kept his buy rating on Nvidia stock and lifted his price target to 66 from 60.
Data center and automotive sales outgrew Nvidia’s bread-and-butter segment, up 110% and 68% vs. last year, though only comprising 11% and 8% of total sales, respectively. Nvidia sees a $5 billion opportunity in its data center segment, Rakesh said.
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