Investors and analysts alike were impressed by Nvidia’s (NVDA) - Get Report earnings, revenue and guidance beat on Thursday, raising price targets and sending the stock up more than 6% in early trading on Friday.
Here’w what analysts said about the blowout quarter:
Barclays (Overweight, Price Target Raised from $260 to $300)
Reported a beat and raise driven entirely by strength in the Data Center…cloud vendors should see a step up in spend and clearly NVDA has a combination of AI drivers layering in on top of this market improvement. On the competitive front, there still appears little competition as INTC abandoned internal efforts and bought Habana while NVDA is lapping some GOOGL headwinds. Gaming returned to double-digit Y/Y growth and should benefit from the move to 7nm. Net net, this was the Data Center acceleration many hoped for and we look for the upcoming Analyst Day for the next leg of growth driven by the launch of 7nm products.
Citi (Buy, Price Target Raised From $245 to $315)
We expect stock to outperform the group in 2020 on a) improving data center demand led by conversational AI and recommendation engines; b)closure of MLNX acquisition, and c) next gen 7nm Ampere platform announcement at flagship GTC conference in March.
Morgan Stanley (Overweight, Price Target Raised from $259 to $304)
The data center oriented business surged, growing 33% with 15%+ implied growth for April, even amid some coronavirus-related headwinds. With a myriad of forward looking catalysts and growth drivers, we raise our P/E target to 35x (including stock comp expense), bringing our PT from $259 to $304.
Cowen (Outperform, Price Target Raised from $240 to $325)
NVIDIA posted a significant beat/raise, with datacenter the blowout vertical. We believe the results/guidance are driven by a cloud CapEx recovery and the driving force of real- time conversational AI with the scaled ramp of Ampere still to come. To us, results/guidance offer further validation of NVIDIA's intact accelerated computing HW/SW competitive moats.
-Matthew D. Ramsay
Bernstein (Market Perform, Price Target Raised to $300)
There wasn't much to nitpick on the quarter; with a datacenter number that powerful (especially after a years' worth of comparable stagnation) the NVDA story of old feels poised to come roaring back, & they delivered even as expectations had risen markedly into the print.
The natural further question is of course around sustainability of the datacenter trajectory from here. Investors typically model datacenter growing sequentially into perpetuity, and the company has now set a much higher base, potentially nerve-wracking as we have now seen the segment is big enough to demonstrate cyclicality going forward, especially given typical hyperscale "build and digest" purchase patterns.
We have not been fundamentally negative on NVDA, but admittedly downgraded the shares last year given headwinds (crypto flush, lackluster Turing cycle, & hyperscale pause) that we saw pressuring numbers & fundamentals for some time. While it took a year, the company is emerging stronger than we had anticipated, and it seems clear that not growing more constructive, sooner, was an error on our part. Increasing estimates, taking TP to $300; MP.
Needham (Hold, No Price Target)
NVDA posted a solid beat and raise quarter driven by a rebound in data center and a strong holiday season in gaming. We would note the April revenue guidance implies revenue growth of 36% Y/Y, while impressive, is off a relatively easy compare, as last year revenue was down 31% Y/Y. At current levels, we believe the risk/reward profile is balanced. In order justify further upside in the shares, we have to see: 1) earnings of $10-11 in FY22 (implies 20%+ rev. growth) and an expansion in P/E above 32x. In the near-term, we are concerned about the impact of the Coronavirus on overall gaming demand (30% of overall gaming revenue is from China). Long-term, the competitive landscape in AI training and inference markets is heating up. Maintain Hold.