NVDA - Nvidia - excerpt from Barrons -
If such gains hold, it would be a record close and bring Nvidia's(NVDA) market value to about $808 billion. Shares are up about 148% year-to-date.
Raymond James analyst Chris Caso raised his price target to $365 from $225 and maintained a Strong Buy rating in a note following the earnings release on Wednesday.
He wrote that the graphics card maker crushed analyst expectations for its fiscal third quarter while its forecast for January quarter revenue of about $7.4 billion was even better. He points to an increasing supply and accelerating data center demand as positive signs.
"In the near-term, NVDA's revenue has only been constrained by supply, and increased supply availability -- and increasing supply is boosting revenue," Caso wrote. "Long-term commitments are intended to ensure supply increases moving forward, as they prepare for what's expected to a very robust datacenter spend from both cloud and enterprise customers in 2022."
The stock had a sky-high bar set in recent weeks by the company's surging valuation. Investors and analysts believe the metaverse will provide a multi-billion dollar opportunity for the company to supply chips to power virtual world graphics.
The company's Omniverse open platform, where designers and artists are able to collaborate virtually and create 3D worlds, has stoked even more metaverse excitement.
"Longer-term, the incremental opportunities from Omniverse and software are difficult to quantify since these are brand new markets," Caso wrote. But he pointed to artificial intelligence graphics processing units, which have become the base of a $10 billion business for Nvidia(NVDA). "We know the potential for these new markets are large, and that NVDA possesses leadership in these markets."
The shares are up despite concerns by the U.S. Federal Trade Commission about Nvidia's(NVDA) acquisition of chip designer Arm. Executives said during the company's earnings conference call that Arm licensees have expressed concerns about the deal.
Arm licenses its chip designs to big firms such as Apple(AAPL) and Amazon.com(AMZN) , which use the chips in mobile phones and computer processors. Nvidia CFO Colette Kress said the company is engaged in discussions with the FTC to address the regulator's concerns.
"While NVDA still expects to close the acquisition of Arm, the company prefaced its commentary by indicating some licensees have expressed concerns and regulators are taking a closer look at the deal," Wedbush analyst Matt Bryson wrote Thursday. "Again, we remain more skeptical that this deal will be approved by regulators."
Bryson maintained a Neutral rating and $300 price target. He said the company's fundamentals are "undeniably excellent" but has qualms with a growth multiple beyond 50 times his fiscal 2025 estimates for earnings.
Truist analyst William Stein raised his price target to $389 from $360 and maintained a Buy rating in a note following the report. He argued that Nvidia(NVDA) is the leader in semiconductor and software technology for artificial intelligence, which will drive structural growth. That, according to the analyst, warrants a higher multiple.
Oppenheimer analyst Rick Schafer wrote that the company casts a wide net in data center AI that is supporting some of the buzziest applications, such as image recognition, neuro-linguistic programming, and the metaverse.
"The GPU was initially used to create graphics for video games and film, " Schafer wrote, referring to Nvidia's(NVDA) graphics processing units. "Today, its parallel processing capabilities, supported by thousands of computing cores, are essential for deep learning AI algorithms in datacenters."
New Street Research analyst Pierre Ferragu wrote in a note on Thursday that the company saw strong demand in its gaming and data center businesses, but he doesn't see any near-term catalysts to justify raising his Neutral rating and $270 price target.
"We are buyers only on a material pull-back in the stock and in expectations," Ferragu wrote. |
