Nvidia Analysts Reaffirm Positive Ratings Ahead of Thursday's Earnings

Analysts reiterate their outperform ratings for Nvidia, as study finds more people playing video games.
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Analysts reiterated their outperform ratings for Nvidia  (NVDA) - Get Report Friday, while a survey found that people are spending more time playing video games due to the coronavirus shutdown.

Shares of the Santa Clara, Calif.-based semiconductor giant, which is known for its high-powered gaming graphics chips, were down 1.7% to $315.83 on Friday morning.

Piper Sandler said it surveyed 1,000 Americans about their video game habits both during and after the coronavirus stay-at-home order.

"Overall, we believe the survey is positive for the video game industry, as the average individual is spending more than 2.5x playing video games while staying-at-home," analyst Harsh Kumar said. "In addition, over 60% of respondents expect to spend as much time or more playing video games once the stay-at-home order is lifted."

Kumar said he was also positive on video game hardware spending trends and that he was most positive on Advanced Micro Devices  (AMD) - Get Report and Nvidia from a gaming hardware perspective.

Nvidia is scheduled to report first-quarter earnings on Thursday, May 21 and Oppenheimer analyst Rick Schafer said in a note to clients that he expects the company to beat Wall Street's first and second quarter expectations.

"Given the introduction of new solutions like Tegra for the auto market, we expect NVDA's PC dependence to diminish somewhat," said Schafer, who reiterated his outperform rating with a $350 price target. "We see several sustained structural tailwinds driving sustained outsized top-line growth: gaming, datacenter/AI accelerators, and autonomous vehicles."

JP Morgan analyst Harlan Sur, who reiterated his overweight rating, said he believed Nvidia "continues to execute across all segments."

"While 1H is typically seasonally weaker than 2H, we expect solid demand in PC gaming to be a strong revenue driver for the company, offsetting PC OEM, which is in secular decline," Sur said. "We expect the data center segment to grow strongly as hyperscale customers continue to embrace GPU-accelerated deep learning for processing large data sets."

Sur said he was "encouraged by strength in the automotive and enterprise segments as well, although strong adoption of autonomous driving in the market remains to be seen." 

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