Tag Archives: NASDAQ:NVDA

NVIDIA: Zacks’ Bull of the Day Play

I last wrote about NVIDIA (NVDAFree Report) as the Bull of the Day in mid-August when you could still scoop shares near $60. Before that, I was recommending shares under $30 in January when its emerging earnings momentum made it a compelling combination of growth and value in technology.

Since then, the specialty semiconductor graphics company delivered another blowout quarter of results that have driven shares above $90, and reinstalled the stock as a fixture in the top tier of the Zacks Rank as a #1 Strong Buy.

Earnings Stunner

On November 10, NVIDIA reported record quarterly revenue of $2 billion, up 54% from a year ago, and up 40% from $1.43 billion in the previous quarter.

The company also delivered record GAAP EPS of $0.83, up 89 percent from a year ago. This was over 45% better than the Zacks/Wall Street consensus.

In response to these results and optimistic company guidance, analysts scrambled to raise estimates yet again. Full-year EPS projections for the current fiscal year ending in January 2017 rose 33% from $1.86 to $2.48.

And next year’s consensus profit estimate surged 43.5% from $1.93 to $2.77. And even after a fantastic year where NVIDIA is projected to hit $6.84 billion on the top line for 36%+ sales growth, next year’s consensus is for 14.5% revenue growth to $7.84.

Firing On All Frontiers

NVIDIA designs, develops and markets a top-to-bottom family of award-winning 3D graphics processors, graphics processing units and related software that set the standard for performance, quality and features for every type of desktop personal computer user, from professional workstations to low-cost computers.

NVIDIA’s 3D graphics processors are well known in the video game industry, but the company has been steadily making inroads into virtual reality, education applications and machine learning technology like that for autonomous driving.

Here’s what the founder and CEO had to say about their growth…

“We had a breakout quarter – record revenue, record margins and record earnings were driven by strength across all product lines,” said Jen-Hsun Huang, founder and chief executive officer, NVIDIA. “Our new Pascal GPUs are fully ramped and enjoying great success in gaming, VR, self-driving cars and datacenter AI computing.

“We have invested years of work and billions of dollars to advance deep learning. Our GPU deep learning platform runs every AI framework, and is available in cloud services from Amazon (AMZNFree Report) , IBM, Microsoft and Alibaba (BABAFree Report) , and in servers from every OEM. GPU deep learning has sparked a wave of innovations that will usher in the next era of computing,” he said.

Driving Innovation

Of note in the quarter were four developments in the automotive segment:

1) The company announced that its NVIDIA DRIVE PX 2 platform will power a new AutoPilot system in all of Tesla Motors‘ (TSLAFree Report) factory produced vehicles – the Model S, Model X and upcoming Model 3.

2) NVIDIA unveiled its next-generation Tegra processor, codenamed Xavier, an AI supercomputer on a chip for self-driving cars.

3) Partnered with China’s Baidu (BIDUFree Report) to develop a self-driving, artificially intelligent car and mapping system.

4) Announced an AI partnership with Europe’s TomTom to create a cloud-to-car mapping system for self-driving cars using NVIDIA DRIVE PX 2.

While the stock seems richly valued now, trading at over 33X next year’s $2.77 estimate, this is the kind of company, well-positioned in several tech growth markets, that can probably continue to command such a multiple.

My advice is to make a plan to buy the pullbacks into the $80s.

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NVIDIA: Zacks’ Bull of the Day Play

NVIDIA (NVDAAnalyst Report) became a Zacks #1 Rank Strong Buy in January when shares were trading under $30. Since then, the stock has more than doubled and rising earnings estimates have the name back to a #1 again after a strong Q2 earnings report on August 11.

NVIDIA designs, develops and markets a top-to-bottom family of award-winning 3D graphics processors, graphics processing units and related software that set the standard for performance, quality and features for every type of desktop personal computer user, from professional workstations to low-cost computers.

NVIDIA’s 3D graphics processors are well known in the video game industry, but the company has been steadily making inroads into virtual reality, education applications and machine learning technology like that for autonomous driving.

I last wrote about NVDA as our Bull of the Day on January 4 and here’s what I said…

NVIDIA was the top performing large-cap semiconductor stock of the fourth quarter, with a stunning 60%+ move higher since their Q2 earnings report in early August.

And tonight at the International Consumer Electronics Show (CES) in Las Vegas, the company is likely to reveal further insights into their plans to stay hot on technology investor radars in 2016. In fact, they announced on New Year’s Eve that they plan to unveil new technology for self-driving cars.

Firing On All Frontiers

NVIDIA reported revenue for the second quarter ended July 31 of $1.43 billion, up 9% sequentially and up 24% from $1.15 billion a year earlier. This was above the company’s original guidance range of $1.35 billion +/- 2%.

GAAP earnings per diluted share for the quarter were $0.40, compared with $0.05 a year ago and up 21% from $0.33 in the previous quarter.

The company saw growth across all platforms and noted the strong launch of Pascal-based GPUs and growing demand for deep learning applications. Gaming and professional graphics were the leaders, while datacenter and automotive also contributed to growth in the July quarter.

“Our strategy to focus on creating the future where graphics, computer vision and artificial intelligence converge is fueling growth across our specialized platforms — Gaming, Pro Visualization, Datacenter and Automotive,” said Jen-Hsun Huang, co-founder and chief executive officer, NVIDIA.

“We are more excited than ever about the impact of deep learning and AI, which will touch every industry and market. We have made significant investments over the past five years to evolve our entire GPU computing stack for deep learning. Now, we are well positioned to partner with researchers and developers all over the world to democratize this powerful technology and invent its future.”

Great Quarter Launches Estimates Higher

NVIDIA gave forward guidance for revenue to be $1.68 billion +/- 2%. The midpoint here would be up 18% sequentially and up 29% yr/yr.

Based on the top and bottom line beats and company guidance, analysts moved quickly in the last week to raise EPS estimates for this year and next.

For the current fiscal year ending in January of 2017, the Zacks consensus jumped 17% from $1.56 to $1.83 as 11 analysts chimed in with fresh projections.

That equates to 69% annual EPS growth.

And for next year, 10 analysts boosted the consensus 24% from $1.54 to $1.91. The growth drops off here to only 4% and that might explain why the stock hasn’t surged higher after the beat and raise for this year.

While there are some concerns among analysts that the company will face increasing competition in datacenters and gaming, NVIDIA continues to lead innovation in many areas.

If virtual reality is going to become foster viable entertainment and education platforms — as Facebook (FBAnalyst Report) must believe with their $2 billion purchase of Oculus VR in 2014 — NVIDIA’s top technologies will be involved because the 3D graphic processing expertise required for VR is so demanding and specialized.

It’s probably not something a startup or even giants Intel (INTCAnalyst Report) or Qualcomm (QCOMAnalyst Report) will overtake them on any time soon.

NVDA looks like one to buy on any dips into the $50s.

Confidential from Zacks

Beyond this Bull of the Day, would you like to see Zacks’ best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now >>.

Nvidia: Zacks’ Bull of the Day Play

Earnings season has been pretty dicey for most companies, but the tech sector has been the exception. Companies here have managed to blow by expectations and post solid guidance, something that has been in stark contrast to many in the industrial or consumer segments. But while most investors have focused in on giants like Google or Amazon, chip stocks like Nvidia (NVDAAnalyst Report) have also posted good numbers too.

In fact, NVDA just crushed earnings expectations for its most recent quarter, posting EPS of 40 cents a share compared to an estimate of just 25 cents per share. This follows up another tremendous beat for the company—NVDA beat by 136% in the previous quarter—and it shows us that this stock has been on fire as of late.

But can this trend continue heading into 2016? That is obviously the most important question for investors right now and it might be a good idea to look to recent earnings estimate revisions for some help on this front.

Recent Estimates

Thanks to the earnings beat and solid guidance in terms of revenues, analysts have been raising their estimates for NVDA stock as of late. Eleven estimates for the current year have gone higher for NVDA’s EPS estimate in the past seven days while zero have gone lower, and we have seen a similar trend for the next year time frame too.

The increases have been pretty solid too, suggesting that analysts believe good things are ahead for NVDA stock. The current year estimate has surged by 31% basically since the earnings report, while the following year consensus estimate has surged by 14.4% as well. Clearly, analysts expect great things of NVDA in the near future as strong demand continues for their high performance chips, and for cloud-based solutions which is becoming a key area in the computing world.

For these reasons, it should be pretty clear why NVDA has earned itself a Zacks Rank #1 (Strong Buy) and that we are looking for more outperformance from this security in the near term. Yes, shares have already moved higher, but with these kind of estimate increases there is plenty still to like about Nvidia stock.

Bottom Line

Investors should also note that the semiconductor- general segment is in the top 5% of all segments we track. So, not only is NVDA primed for outperformance, but there is a pretty solid underlying trend in the space too.

This could make NVDA an overlooked but good choice for investors in the tech world, and one that goes beyond the giants of Microsoft or Apple. So give this top ranked stock a closer look as it may be one of your best technology bets this holiday season.

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NVIDIA: Zacks’ Bear of the Day Play

We’ve been hearing about the death of the PC for years now. Surprisingly those archaic box machines have held up pretty well considering the onslaught of new products. Tablets, Smart Phones, Phablets, Smart Watches, the list goes on and on. Still, a quarterly downdraft in PC shipments in Q1 dragged down many stocks that align their fate to the PC business. While not as closely tied to the PC segment as Intel (INTCAnalyst Report) or Advanced Micro Devices (AMDAnalyst Report), today’s  “Bear of the Day” felt the pain from the wait for Win10.

NVIDIA (NVDAAnalyst Report) was once one of my favorite stocks. I personally use an NVIDIA card in my home PC as well as my laptop. They are the standard by which graphics processing units or GPUs are measured. Their main competition in the space, AMD, takes a back seat on nearly every metric aside from price. A characteristic NVDA attacked when it announced the pricing of its flagship GTX 980 and the rest of its 900 series.

NVDA missed Q1 2015 estimates, coming in at 24 cents EPS versus our Zacks Consensus Estimate of 26 cents EPS. This was the first quarterly miss for NVDA in five years. The miss wasn’t as troubling as the weak Q2 revenue guidance. NVDA expects to see sales at $990 million to $1.03 billion, well below estimates of $1.18 billion.

The news prompted analysts to drop their earnings estimates for the current quarter, next quarter, current year and next year. The bearish activity has slashed consensus across the board over the last seven days. The most dramatic cuts affect the current year and next year’s numbers. Twelve analysts have revised downward, moving current year consensus from $1.20 down to 89 cents while next year’s numbers have dropped from $1.31 to $1.14.

You can see the huge spike in volume for NVDA shares over the last several days with Monday’s volume approaching 28 million shares trading hands. The recent drop in the stock price has taken the Commodity Channel Index all the way down to -370. Now the stock is retesting the lows of March. Should that level of support be broken the next likely support sits at the February low on the shy side of $19. But with a harsh technical picture and increasing volumes, you may want to let this play itself out before looking to jump in long.