Wall Street sees good tidings in sight NVIDIA Corporation (NASDAQ:NVDA) and Micron Technology, Inc. (NASDAQ:MU), with one top analyst sizing up NVDA’s data center momentum to be fervently on the rise on back of new ODM partnerships, while another analyst anticipating Micron will be ready to break its stock highs of 2014 in its third fiscal quarter. As RBC Capital praises NVDA’s moves forward in the AI space and Morgan Stanley boosts forecasts for Micron even without expectation for a positive preannouncement, it is clear these analysts are casting bullish votes for these chip makers. Let’s take a closer look:
No Slowdown in Sight for NVIDIA Data Center
NVIDIA recently announced its plans to connect with leading original design manufacturers (ODMs) across the globe, including the likes of Foxconn, Inventec, Quanta, and Wistron. The chip giant’s eyes are on bolstering its robust data center segment through savvy artificial intelligence (AI) strides forward, and top analyst Mitch Steves at RBC Capital is out praising the company today, cheering, “We see no slowdown in sight.”
As such, the analyst reiterates an Outperform rating on shares of NVDA with a $150 price target. The NVDA team is opening the door to these ODMS in advance to its HGX reference architecture, with a partner program that will enable both the design process while introducing GPU-accelerated systems to the market.
“Notably, both the Tesla P100 and V100 GPU are compatible with HGX and we think this will create a smooth transition to the new Volta product line. With the 10 largest hyperscale companies using Nvidia GPUs combined with ODM adoption we see continued triple digit growth in the Data Center segment. In addition, we continue to believe the AI segment of the Data Center will outpace the overall core Data center segment (North of 200% y/y growth),” contends Steves, who asserts, “Net Net: we see no slow down in the data center segment and remain positive on both the AI and inference opportunities.”
Mitch Steves has a very good TipRanks score with a high ranking of #67 out of 4,575 analysts. Steves has a 92% success rate and realizes 31.9% in his yearly returns. When recommending NVDA, Steves garners 74.9% in average profits on the stock.
TipRanks analytics exhibit NVDA as a Buy. Out of 22 analysts polled by TipRanks in the last 3 months, 12 are bullish on NVIDIA stock, 8 remain sidelined, and 2 are bearish on the stock. With a loss potential of nearly 13%, the stock’s consensus target price stands at $129.35.
Micron’s Conditions Appear Stronger Than Expected
Morgan Stanley analyst Joseph Moore no longer sees the same price dips happening in the third fiscal quarter for Micron he once warily anticipated, and subsequently his boosting his expectations on back of prices remaining “robust.” Therefore, the analyst reiterates an Overweight rating on MU with a price target of $34, which represents a just under 9% increase from where the shares last closed.
Ahead of the third fiscal quarter of 2017, the analyst has boosted DRAM pricing projects from -2% to flat m/m and NAND estimates from -11% to flat m/m. Additionally, the analyst lifts his revenue expectations from $5.42 billion to $5.70 billion and EPS from $1.28 to $1.51. Full year EPS estimates for the fiscal year have also been tweaked upward from $4.01 to $4.23, with fiscal 2018 revenue rising from $19.7 billion to $20.7 billion and EPS climbing from $3.19 to $4.03.
Moore explains, “While we don’t expect a positive preannouncement for May, we had budgeted for price declines in the August quarter that no longer seem likely. While markets have calmed during the period of seasonal weakness, conditions remain robust, and we expect above cycle earnings to persist.”
Additionally, “We still think it’s likely that the stock tests its mid 2014 highs of $36. Quarterly earnings this quarter should meaningfully surpass 2014 peaks, even correcting for changes to depreciation terms […]” continues Moore, who notes that even considering NAND supply acceleration potentially hitting next year and a “longer-term overhang of Chinese entry into the market,” the analyst still does not see the stock falling under $30 with a $6 run rate in tow.
Overall, the analyst concludes, “It seems likely that there is small upside, based mostly on the company’s pattern of guiding fairly conservatively, and a pricing environment that, while a bit more mixed than prior quarters, still seems likely to be above a conservative expectation given 2 months ago. While it’s hard to be sure, we doubt that there is enough upside to drive a preannouncement – particularly given how much better company guidance was vs. our expectations.”
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Joseph Moore is ranked #402 out of 4,575 analysts. Moore has a 61% success rate and yields 14.1% in annual returns. When suggesting MU, Moore collects 91.1% in average profits on the stock.
TipRanks analytics demonstrate MU as a Strong Buy. Based on 19 analysts polled by TipRanks in the last 3 months, 16 rate a Buy on Micron stock, 2 maintain a Hold, while 1 issues a Sell on the stock. The 12-month average price target stands at $38.73, marking a 24% upside from where the stock is currently trading.