The chip maker said adjusted earnings for the three months ending on April 28, the group's fiscal first quarter, came in at 88 cents per share, down more than 57% from the same period last year but still 7 cents ahead of the consensus Street estimate. Group revenues, as well, beat analysts' forecasts even as they fell 31% to $2.22 billion.
ActionAlertsPlus Research Analyst Zev Fima breaks down what investors need to know about the chip stock going into the second half of 2019, including what catalysts to watch out for in the near-term and how the Mellanox acquisition will help them in the long term with both the data center and autonomous driving.
Additionally, Zev breaks down what exposure Nvidia has in China and what potential headwinds the stock could face should more tariffs be imposed:
"This round of tariffs, the increase to 25% from 10% on $200 billion of Chinese imports, is not heavily tied to technology. So it's the next potential round of tariffs that pose the real risk. Should tariffs be levied on an additional $300+ billion in goods, it is expected to cause a material impact on tech earnings as tech products are the ones that have thus far been spared. Seeing as Nvidia generates over 20% of revenues in China, this is a real headwind investors must factor into their thinking."
He also notes that the Mellanox acquisition still requires Chinese approval. It is a hurdle that must be overcome, as it has created uncertainty that has no doubt contributed to the recent pullback, especially should investors come to believe that a US/China trade deal is further out the previously thought