tiprankstipranks
Nvidia: Making Secular Growth Play with Omniverse
Stock Analysis & Ideas

Nvidia: Making Secular Growth Play with Omniverse

Nvidia’s (NVDA) investors cheered its outstanding Q3 results as the stock went up 8.3% in Thursday’s trading. Nvidia currently has a market capitalization of $791.9 billion, more than thrice the market cap of its closest competitor, Intel (INTC).

The semiconductor giant’s revenues soared 50% year-over-year to a record $7.1 billion, surpassing consensus estimates of $6.83 billion. Adjusted earnings came in at $1.17 per diluted share, a jump of 60% year-over-year, beating the consensus estimate of $1.11. (See Analysts’ Top Stocks on TipRanks)

Jensen Huang, founder and CEO of Nvidia commented, “Demand for NVIDIA AI [artificial intelligence] is surging, driven by hyperscale and cloud scale-out, and broadening adoption by more than 25,000 companies. NVIDIA RTX has reinvented computer graphics with ray tracing and AI, and is the ideal upgrade for the large, growing market of gamers and creators, as well as designers and professionals building home workstations.”

What proved to be the highlight of the company’s Q3 earnings call was the details it provided about its Omniverse platform.

Huang elaborated further, “Omniverse will be used from collaborative design, customer service avatars and video conferencing, to digital twins of factories, processing plants, even entire cities. Omniverse brings together NVIDIA’s expertise in AI, simulation, graphics and computing infrastructure. This is the tip of the iceberg of what’s to come.”

The company’s management added on its earnings call that it expects its overall monetization from the Omniverse of $1,000 per year, per user. According to Rosenblatt Securities analyst Hans Mosesmann this would set up a “huge opportunity for monetization.”

The analyst noted that the Omniverse platform would need both hardware and software stacks “that no semiconductor company (any company) can bring together like Nvidia.”

Moreover, Mosesmann pointed out that the company’s exceptional Q3 results supported “the notion of sustained accelerated broad-based demand (DC, enterprise, gaming) that will be limited through 2022.”

The analyst added that AI is changing the production and landscape of computing “in ways that historical views of traditional cycles are, well, useless.”

As a result, Mosesmann perceives NVDA as a “best-in-class AI play” with several impending growth drivers including Omniverse, autonomous driving, next-generation networking, or data processing unit (DPU) adoption.

It remains one of the analyst’s “favorite secular semiconductor plays” and he remains bullish, with a Buy rating and a price target of $400 (24.3% upside) on the stock.

The rest of the analysts on Wall Street echo Mosesmann with a Strong Buy consensus rating based on 22 Buys and two Holds. The average Nvidia price target of $356.91 implies 11% upside potential to current levels.

Disclosure: At the time of publication, Shrilekha Pethe did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles