Top Analyst Defends NVIDIA Corporation (NVDA) in Light of Recent Pullback

NVIDIA Corporation (NASDAQ:NVDA) shares rattled the Street with a stark 9% drop yesterday and have been on a downward spiral ever since the chip giant first posted fourth-quarter earnings. Nonetheless, top analyst Vijay Rakesh at Mizuho remains undeterred in his bullish optimism for the stock’s long-term potential.

Particularly “[…] as NVDA continues to drive secular trends in gaming, VR, Automotive, Data Center and Deep Learning,” the analyst reiterates a Buy rating on shares of NVDA with $130 price target, which represents a just under 29% increase from current levels.

In fact, with new releases just around the corner, which includes Take-Two’s buzz-worthy Red Dead Redemption 2 coupled with Activision’s Destiny, the analyst puts confidence in gaming to save the day for the short-term shaken giant.

“We believe while there is some worry that gaming is slowing down with JanQ(F1Q18) gaming revenues by our estimates down 11-14% q/q, we would note NVDA’s gaming revenues were down (15%) q/q last year F1Q17 and (9% q/q) F1Q16 and we believe similarly in F1Q15. […]  NVDA had tailwinds in June LY with the Titan launch, but we believe it would be premature to write off the gaming cycle on one quarter of seasonal softness,” argues the analyst.

Another long-term advantage shines on the giant’s Data Center as well as with Deep Learning, where NVDA’s Data Center benefits from lack of competition. As Deep Learning as well as Artificial Intelligence continue to take center stage among the public eye, NVDA stands on solid ground thanks to this trend ready to span the test of time.

Additionally, the analyst anticipates the chip giant will be revving up on the automotive front on back of Drive PX2, even if the transition is not immediate. Sizing up the situation to next year, Rakesh sees Drive PX2 ramps jump-starting by late third and fourth quarter into 2018.

Rakesh is looking at the bigger picture and concludes, “We would be buyers with the recent ~15% pullback in NVDA post earnings. We believe gaming and Deep Learning will continue to be L-T sustainable trends as new titles get released and Enterprise transforms from agility and speed to a smarter, efficient, predictive enterprise. With NVDA presenting at upcoming conferences and going into JunQ with E3 and GTC, we believe it should give investors more clarity and position for upside.”

Vijay Rakesyh has a very good TipRanks score with a success score of 73% and a high ranking of #36 out of 4,499 analysts. Rakesh garners 27.2% in his yearly returns. When recommending NVDA, Rakesh realizes 32.8% in average profits on the stock.

TipRanks analytics demonstrate NVDA as a Buy. Out of 28 analysts polled by TipRanks in the last 3 months, 15 are bullish on NVIDIA stock, 9 remain sidelined, and 4 are bearish on the stock. With a return potential of nearly 14%, the stock’s consensus target price stands at $114.91.

More stocks covered by top performing analysts can be found here.

  • domahman

    Get it at a discount. Huge industry based on gpu just in embryonic stage and developing fast!

  • LonnieL

    Finally a voice of reason! I don’t buy the “slowing down” theory whatsoever. More and more people getting online and India is still in its infancy in mobile! Thank you for a good honest report.

  • Adam William Majkowski

    I sold all my stock except this one, only because I am down now after that big dip. Intel and Cisco are great companies too, but they never got back to their insane high in 2000. I am going to sell all my shares as soon as I am up at all. There is a 100% chance of a major stock market crash under or right after Trump. Every republican president has triggered major sell offs that took years or decades to recover from. Every time we had a millionaire president, we had a serious depression, not just a recession. Hoover in 1929, and Bush in 2008, now Trump in 2017. Remember stocks will go down hard for 2 – 3 years and then it will be OK to buy again as long as a democrat comes to fix the tax cuts and cuts to social programs. Or better yet, a real economic recovery would be a Green president or Bernie Sanders socialist. If we fix our laws, we can prevent stocks from flying up and crashing down. The recession from Eisenhower tax cuts in the 50’s did not affect us much because we had so many social program options at the time and a real minimum wage. Same with the Nixon recession in 1973. We had just crated welfare and medicaid and people were not dying in the streets yet. Not until the late 70’s and 80’s. The Reagan crashes were buying opportunities for the wealthy but hurt regular investors. By 1993, 12 years of republican meant non stop recession and an actual republican raising taxes to save us. We can set up a world where housing always goes up, stocks always go up unless the company is falling apart, and interest rates stay the same. We are heading backwards with republican nonsense and we are about to pay for a nice fat war with Iran or Saudi Arabia or both. So we might see another spike in this stock, or we might see another Cisco or Intel and watch it slowly head back to 15, never to see 100 again. With Trump as president, it is very possible we wind up isolated completely from the rest of the globe in 2 years. We say it every time, but we might not survive this republican. We are seriosuly resillient people.

  • Yelena Gordiyenko

    This guy is one of the few who are making any sense right now. All these other hotshot hedge fund managers are blasting NVDA. Why? I think they’re mad that they didn’t get on the bandwagon while they could and missed an amazing opportunity so now they want the company to fail. Oh well, their eventual loss is someone else’s gain.

  • domahman

    I think they downgraded to save citron’s short. probably got paid for it. orchestrated.

  • Steven Tharp

    Buy it! 3,000,000 share short crashed the price from 111 to 98. The motion started Weds 3:59 and completed by Thurs 11:04. Then money came in and bought 2,000,000 @ 100 between Thurs 11:09 to Thurs 1:12 PM. The first great theft of 2017, big money engineered a fortune in shorts on thursday and set the stage, Friday, to make another fortune in the future. There will be more of this thievery to happen, the SEC is not an enforcer. Buy Intel? I never buy a company with negative earnings, you risk having your head handed to you. The orchestra played a beautiful piece for all, don’t you agree?