The latest earnings season is mostly done but not all companies have delivered their latest financial reports. In particular, Wall Street will be very interested to find out how Nvidia’s (NASDAQ:NVDA) latest quarterly readout and outlook pans out when it announces its fiscal second-quarter of 2024 report on Wednesday (August 23).
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
Avid market watchers will already know how big this year has been for the chip giant. Nvidia has joined the $1 trillion market-cap club, boosted by being at the forefront of the AI revolution and delivering an FQ2 outlook that astounded the Street back in May.
Hence, heading into the print, expectations are high, but can the company deliver another beat-and-raise special? This appears to be the take of Oppenheimer analyst Rick Schafer, who states that the company remains the “purest scale play on AI adoption.”
The only thing curbing near-term growth, says Schafer, is whether Nvidia has enough supply to satiate “broad, robust AI demand.” As an indication of how much its products are coveted, ahead of a potential US export ban, there are reports that China CSPs (cloud service providers) are ordering $1 billion of A800 GPUs this year and another $4 billion for next year.
By segment, Schafer sees data center (DC) sales, which currently make up 60% of revenues, increasing by an enormous 85% sequentially and by 108% year-over-year. “Enterprises scrambling for an AI strategy and CSPs racing to train/deploy AI models in the wake of GenAI,” notes the 5-star analyst, who also expects the new Grace and GH200 Grace Hopper superchip to “add 2H upside.”
Elsewhere, once Nvidia’s main breadwinner, the gaming segment now accounts for 31% of sales, and Schafer sees it rising sequentially by ~5% whilst returning to more than a $10 billion/year run-rate in the quarter.
Summing up, Schafer thinks Nvidia’s “entrenched DC/AI ecosystem is core to GenAI adoption.” Therefore, the Oppenheimer analyst lift his price target on NVDA to $500 (from $420), making room for further gains of 9% over the one-year time frame. Schafer’s rating stays an Outperform (i.e., Buy). (To watch Schafer’s track record, click here)
For the most part, other analysts don’t beg to differ. Out of 34 total analyst reviews published in the last three months, 32 analysts rated the stock a Buy while only 2 said Hold. Therefore, NVDA is a ‘Strong Buy.’ Meanwhile, the $532.98 average price target implies shares could surge 16% in the coming year. (See Nvidia stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
