Reports Q2 FY2022 results on Wednesday, August 18, after hours
Expected Revenue: $6.32 Billion
EPS forecast: $1.02
When NVIDIA (NASDAQ:) reports its latest earnings later in the day, the largest chip maker by market value in the US could show it continues despite industry-wide shortages and supply disruptions due to the pandemic.
This optimistic outlook is fueling additional gains in the company's stock, which are up 49% this year, contributing to the stock's 380% rally since the onset of the pandemic. Shares closed at $194.58 on Tuesday.
Nvidia weekly chart.
California-based NVIDIA is a supplier of the key components needed for all of the major, fast-growing technologies in the industry, including cloud computing, artificial intelligence, robotics automation, mobile computing and the Internet of Things.
The industry-wide shortage of chips has caused prices for some products to rise, while orders for others have been delayed. Behind this shift—from a robust growth scenario to supply constraints—is the pandemic-driven demand for everything, including cell phones, laptops, cloud computing, and game consoles.
NVDA's Chief Executive Officer Jensen Huang told investors in May that demand from data centers, gamers and cryptominers remains strong, and the company faces few hurdles to fulfill these orders. The company's revenue for the quarter ended June 30 is expected to grow 39% to $6.32 billion, according to analyst consensus forecast.
$250 price target
Cloud providers, such as Google (NASDAQ:) and Amazon (NASDAQ:), are using NVIDIA graphics chips to power some of their most widely used services on the Internet. to provide. The chipmaker continues to see demand for consumer PC gaming equipment in a home environment due to the pandemic.
NVIDIA's graphics chips are also key components in machines that perform the mining required to create Bitcoins and other cryptocurrencies. A portion of its $400 million second-quarter revenue will come from specialty chips that NVIDIA has developed for use by cryptocurrency miners.
Analysts at Rosenblatt Securities, who raised their price target for NVIDIA stocks from $200 to $250, said this month that the company is a "best-in-class" artificial intelligence game.
Their note said:
"We are bringing our Buy-rated NVDA price target of $200 based on earnings above $6.00 for FY24 (Calendar 2023) on best-in-class AI game with growth vectors to next-generation networks /DPU (data processing unit) adoption and early days of autonomous driving software kicker.”
Analysts polled by Investing.com have a similar opinion about the stock.
Chart: Investing.com
Of the 41 respondents, the majority expect the stock to perform better in the next 12 months.
BMO Capital Markets, which also raised its outlook for the stock, said in a recent note that NVDA has more upside potential generated by the growth in its data center business.
It said in a note:
"Looking further into the company's data center business, we see the company growing to a $32 billion business a few years later, compared to our previous expectation of $25 billion."
Starting point
NVIDIA remains one of the best-loved names in the chip industry due to its growing share of data center and gaming segments. Today's earnings could provide further evidence that this growth has more room to turn.
