In recent times, the Nvidia (NASDAQ:NVDA) story has been marred by the deceleration of its Gaming segment, once its major revenue generator. However, not only did the chip giant’s fiscal fourth-quarter (January quarter) results beat expectations, but they also signaled that the Gaming business might be waking from its slumber.
In total, the company generated revenue of $6.05 billion in the quarter, although amounting to a 20.8% year-over-year drop, the figure edged ahead of the consensus estimate by $30 million.
As expected, Data Center (DC) revenue accounted for the bulk of the haul, although at $3.616 billion, sales were down 10.8% year-over-year and 5.7% quarter-over-quarter in what amounted to the first negative sequential drop for DC in 4 years. The company put this down to cuts to cloud budgets. On the other hand, while Gaming dropped by 46.5% from the same period a year ago to $1.831 billion, the segment showed a 16.3% QoQ improvement while also coming in stronger than the $1.6 billion expected.
On the bottom-line, adj. EPS of $0.88 easily trumped the $0.80 estimate.
Looking ahead, for the first quarter of fiscal 2024, give or take 2%, revenue is anticipated to reach $6.50 billion vs consensus at $6.32 billion, and given its leading positions in gaming and data center, CEO Jensen Huang stressed the company is extremely well-positioned to ride the AI wave.
Assessing the print, Morgan Stanley analyst Joseph Moore says that “despite the data center miss in January (more than offset by gaming upside), we do like the story from here.”
However, while calling Nvidia “the most exciting name in our coverage,” Moore also points out the stock remains “more than 2x more expensive than any other name in our coverage.”
“We were hoping to wait for a pullback,” Moore went on to say, “but other than the broader market concerns, is that pullback going to come?”
Given investors’ upbeat reaction to the print, not right now, it seems. As such, for the moment, Moore stays on the sidelines with an Equal-weight (i.e. neutral) rating, although the price target is raised from $246 to $255, suggesting shares will rise ~8% over the coming months. (To watch Moore’s track record, click here)
Among Moore’s colleagues, rating wise, the bulls are in front. NVDA’s Moderate Buy consensus rating is based on 25 Buys, 6 Holds, and 2 Sells. (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 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.
