Nvidia’s data-center sales may embrace gaming – it may not be good

Nvidia Corporation’s data-center sales are expected to limit its gaming sales in the first quarter of the financial year, as demand from server firms is high and gaming interest has declined sharply ahead of the Covid-19 epidemic.

The financial results are scheduled to be reported after the closing bell on Wednesday. Analysts surveyed by Factset expect Nvidia’s data-center sales to be $ 3.58 billion, a 75% profit from the same quarter a year ago, the second time in the company’s history that data-center sales topped gaming sales.

Analysts expect 3.46 billion gaming sales. Last quarter, Colette Cress, NVIDIA’s chief financial officer, predicted that data-center growth would accelerate in the first quarter, with data-center sales rising 71% year-on-year to a record $ 3.26 billion after the fourth quarter.

Read: Why semiconductor stocks are not ‘almost investable’ despite record earnings amid global deficit

So far, the earnings season has shown strong gains for server chips. Intel Corporation INTC,
Data-center revenue grew 22% to $ 6 billion and Advanced Micro Devices Inc. AMD,
Posted its first $ 5 billion-plus quarter and directed for its first $ 6 billion-plus period.

The data center makes up a “less than 20-percent” of AMD’s enterprise, embedded and semi-custom chips units – including data-center and gaming-console revenues. That’s% 2.5 billion, up 88% from a year ago. Sales will become more transparent as the company will eventually start selling data-centers in its own department.

While AMD and Nvidia Server are fighting for shares in the CPU, Nvidia dominates its role as an accelerator for the data center. Jefferies analyst Mark Lipassis, who has a buy rating and a target price of $ 370 on Nvidia, said the chip maker “dominates the Dedicated Accelerator precedent” with about 80% of data-center sales.

Read: End of One-Chip Wonder: Why Nvidia, Intel, and AMD Evaluation Has Gained Rise

Following the results of Intel, AMD and others, Everco analyst CJ Muse, which has an overweight rating on Nvidia and a target price of $ 300, says data-center products are facing “strong demand trends that are expected to lead to very strong growth in the future”. A few quarters. ” Demand, however, rarely seems to be a problem; Rather, it is the problem of supply difficulties and the ever-increasing roadblocks.

Investors Cisco Systems Inc. Look for any problems like CSCO,
+ 2.92%,
Which reported its earnings last week. Cisco – which has an April-ending quarterly like Nvidia – noted that it was expanded after Chinese authorities locked down Shanghai on March 27 and threw a monkey wrench into the power to get Cisco’s components. As a result, Cisco has issued a weak outlook and shares have seen their worst day in more than a decade.

What are you expecting?

Earnings: Of the 39 analysts surveyed by FactSet, Nvidia is expected to post consistent earnings of গড়ে 1.30 per share on average, up from 92 cents per share reported a year ago and শেয়ার 1.19 per share expected at the beginning of the quarter. All figures are adjusted for last year’s 4 -1 stock split.

Revenue: According to 36 analysts surveyed by FactSet, Wall Street expects ভ 8.12 billion in revenue from Nvidia. This is up from Nvidia’s forecast of $ 5.66 billion in the previous quarter and $ 7.28 billion at the beginning of the quarter. In its latest earnings report, Nvidia forecasts 7.94 billion to $ 8.26 billion.

Stock Movement: Shares of Nvidia fell 25% in the first, or April-ending, quarter, while the PHLX semiconductor index SOX,
Decreased by 17% during that period. Meanwhile, the S&P 500 Index SPX,
+ 0.01%
8.5% decline, while Nasdaq Composite Index Comp,
Decreased by 13%. On November 29, Nvidia’s stock closed at an all-time high of 3 333.76 and has fallen 50% since then.

Nvidia has consistently topped analyst estimates for revenue over the past five years, beating street revenue estimates for 12 consecutive quarters. Shares fell 7.6% the day after last quarter’s report, despite earnings beat. Typically, the movement of a stock is mixed into a string of bits.

That’s what analysts say

Oppenheimer analyst Rick Schaefer, who has an outperforming rating and a লক্ষ্য 300 price target, said Nvidia is likely to strengthen its data-center leadership in the third quarter with its new H100 chip ramp.

“Demand continues to outpace supply, although constraints should be eased in 2H,” Schaefer said. “Nextgen Ada Lovelace Performance Gaming GPU 3Q Expected 6 Our long-term thesis remains intact because NVDA’s core pioneering gaming and AI accelerator franchises stand for structural growth.

Read: Chips could be sold for 2022 due to the deficit, but investors are worried about the end of the party

Wedbush analyst Matt Bryson, who has a neutral rating and a target price of $ 190, says any downside for Nvidia is “necessarily related to gaming revenue.”

“For gaming, declining secondary market prices and improved retail availability are among the signals that GPU demand is finally slowing down,” Bryson said. “Although this kind of result implies, especially with the slowing down of Etherium hashing, the specific effect on Nvidia is difficult to measure in a number of variables.”

Read: Nvidia wants to lead the gold rush in Metaverse with new AI tools

Susquehanna financial analyst Christopher Rowland, who has a positive rating and a target price of $ 320, agreed in a note on Wednesday that “any significant beats and growth could be limited by gaming headwinds.”

“For gaming, we think retail premiums on MSRP for Nvidia cards have dropped from + 130% in mid-2021 to + 78% in January and only 23% today,” Roland said. “Consistent with this price reduction, we’ve also seen a significant recovery, now all major card families are available to retailers.”

Of the 45 analysts covered by Nvidia, 37 have buy ratings, seven have ratings and one has a cell rating, with 48% of the stock trading average price target of 9 319.95.

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