Is it almost time for another flex of the muscles for Nvidia (NASDAQ:NVDA)? In a year that has featured blowout earnings reports based on AI dominance and resulting in huge share price appreciation (up by 245% year-to-date), the chip giant is readying to deliver its latest quarterly readout.
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Come the close of trading on Tuesday (November 21), Nvidia will announce its fiscal third quarter of 2024 (October quarter) results, and according to Stifel’s Ruben Roy, a 5-star analyst rated in the top 2% of the Street’s stock pros, it’s expected to be another strong performance.
“Our supply chain discussions remained positive throughout the quarter,” says Roy, who notes that NVDA partners “across the AI ecosystem (hardware OEMs, system integrators, that cloud-based GPU service providers, AI/HPC storage vendors) remain focused on offering NVDA based solutions.”
The midpoint of Nvidia’s Q3 revenue guide stands at $16 billion, implying an extraordinary 170% year-over-year increase and a 19% sequential improvement. However, Roy thinks the company is about to exceed that figure. Based on “supply chain discussions, recent updates to CSP (cloud service provider) capex forecasts, and new product launches,” ahead of the print, Roy has raised his estimates to the higher end of the guided range whilst keeping his gross margin and operating expense results intact. His revenue and EPS forecasts now stand at $16.3 billion and $3.41, respectively, compared to $16 billion and $3.33 beforehand. Meanwhile, consensus has those figures at $16.2 billion and $3.36.
Those results factor in Data Center revenue of $12.9 billion, implying y/y growth of 238% and a 25% quarter-over-quarter increase. “Our checks indicate demand continues to outstrip supply with late-quarter China restrictions not likely to have meaningful impact on October/January quarter results and prospects,” Roy explained. The Gaming segment should also continue its recovery with Roy forecasting revenue of $2.6 billion, amounting to a 68% y/y increase and up 6% sequentially.
Looking ahead, Roy expects Nvidia’s outperformance to continue. In fact, here the top analyst also has new and higher estimates. For the January quarter, he sees revenue reaching $18.4 billion and EPS of $3.91 vs. his prior forecast of $17.3 billion and $3.63, respectively. The Street has $17.9 billion and $3.76.
All told, Roy continues to view NVDA as “the company best positioned to benefit from AI-related infrastructure investment.” As such, the analyst rates NVDA stock a Buy, backed by a $600 price target. This figure makes room for further growth of ~21% in the year ahead. (To watch Roy’s track record, click here)
How does Roy’s bullish forecast echo against the word of the Street? Quite positively, it seems, as TipRanks analytics exhibit NVDA as a Strong Buy. Based on 38 analysts polled by TipRanks in the last 3 months, 37 rate Nvidia a Buy, while only one analyst remains on the sidelines. Overall, these analysts suggest that if everything goes as planned, NVDA will be a $645 stock in the next 12 months, implying ~30% return. (See Nvidia stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
