With AI hype driving the 2023 narrative, arguably the company that has benefited the most from its continued adoption has been Nvidia (NASDAQ:NVDA). That was evident when the company reported its fiscal first-quarter earnings report in May. Wall Street was blown away by the chip giant’s outlook and the shares’ performance have reflected the huge opportunity all things AI represents to the company. To wit, the stock has recorded gains of 197% year-to-date.
With Nvidia readying to announce its fiscal second-quarter (July quarter) results next Wednesday (Aug 23), should investors be bracing themselves for another turbo-charged display?
Most certainly, says Deutsche Bank analyst Ross Seymore. “We expect another stunning print & guide from NVDA, with demand for AI compute still at ‘frenzied’ levels and expected to remain limited by supply for several quarters,” explained the 5-star analyst. “We expect any upside in the qtr/guide to stem from more favorable mix (a likely dynamic, in our view), the company’s ability to secure incremental supply, and potential pull-ins from Chinese Data Center customers ahead of shipment bans.”
For the July quarter, Seymore is calling for revenues of $11.05 billion, representing a sequential increase of an impressive 54%, in-line with the midpoint of the guide and roughly the same as the Street at $11 billion. If that doesn’t sound good enough, then Seymore makes the case upside is “very possible.” On the bottom-line, Seymore sees PF EPS at $2.05, slightly lower than the consensus estimate of $2.07.
Looking forward to F3Q24 (October quarter), Seymore expects revenues will reach $12.2 billion (up 10% QoQ, +105% year-over-year), once again roughly in-line with the Street’s call for $12.3 billion. At the other end of the scale, Seymore anticipates EPS of $2.33, slightly above the Street at $2.30.
If all the above sounds like a resounding endorsement, it comes with a caveat. Although Seymore thinks the “magnitude/slope of future growth has nearly un-capped upside potential,” he points to the “risk of cyclicality should near-term demand not prove sustainable.”
“We remain respectful of the latter dynamic,” he cautiously summed up, “and with shares trading at ~44x our admittedly conservative EPS and clearly already embedding upside to ests (above 5-yr average of ~35x), we maintain our Hold (i.e., Neutral) rating.”
That Hold rating is accompanied by a $440 price target, suggesting the shares are currently going for their fair value. (To watch Seymore’s track record, click here)
Seymore, though, is amongst a minority on Wall Street. Only one other analyst joins him on the sidelines, and with a retort of 30 Buys, the stock claims a Strong Buy consensus rating. The average target comes in at $521.77, suggesting the shares have room for additional growth of 20% in the year ahead. (See Nvidia stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
