Nvidia Corp. (NASDAQ:NVDA) experienced a favorable adjustment in its stock price target, possibly paving the way for more in the near future. This comes after the tech giant surpassed even the most bullish predictions from Wall Street for Q2.
Nvidia Overview: Analyst John Vinh from KeyBanc Capital Markets continues to be positive about Nvidia, emphasizing an Overweight stance. He’s adjusting the price target upwards, moving it from $620 to $670—a 42% rise from the current stock value. Notably, this comes shortly after a previous revision that took the price from $550 to $620.
Diving Deeper: Nvidia’s Data Center segment saw a remarkable increase in revenues, soaring 170% year-on-year to an impressive $10.32 billion in Q2. Vinh forecasts this number to grow further, projecting a 230% jump to $12.7 billion in the upcoming quarter. He attributes this significant growth to the booming AI generative trends.
This momentum is a testament to the solid demand from various sectors—cloud services, consumer internet companies, and enterprises. The Data Center compute revenue segment, in particular, witnessed almost threefold growth. This can be credited to the heightened demand for Nvidia’s HGX platform GPU board by cloud service providers and major consumer internet companies. Additionally, there’s been a surge in Networking revenues, largely powered by InfiniBand.
Region-wise, the U.S. led the charts. Meanwhile, demand from China remained steady, hovering around its historical 20-25%, even amidst potential ban concerns.
On their future outlook, Nvidia hints at a clear vision extending into 2024. To match up with the demand projections, the company is scouting for more suppliers and aims to ramp up its supply each subsequent quarter.
On the gaming front, revenues clocked in at $2.49 billion, slightly shy of Vinh’s $2.60 billion projection. However, demand patterns remain in line with seasonal expectations. The launch of the Ada platforms boosted revenues in professional visualization, tallying at $379 billion, surpassing KeyBanc’s predictions. Yet, the auto segment felt the pinch from tepid China demand, registering a revenue of $253 million, below the anticipated $302 million.
Given this data, Vinh adjusted his revenue and earnings estimates for the upcoming two quarters. He now expects revenues of $16.12 billion and $17.66 billion and earnings per share to be $3.35 and $3.72 for Q3 and Q4 respectively.
Stock Update: Nvidia’s stock climbed by 6.58%, reaching $502.15, in the post-market trading session on Wednesday, right after revealing their earnings.
