Nvidia’s Raring for a FQ3 Beat
NVIDIA Corporation (NASDAQ:NVDA) is gliding on the coattails of PC gaming demand strength, crypto currency opportunity, and artificial intelligence (AI) prospects that add extra razzle-dazzle to room for growth in Data Center. With the chip giant estimated to release its third fiscal quarter print for 2018 on November 9th, what are the odds of an earnings beat heading the Street’s way?
Loop Capital analyst Betsy Van Hees says the probability is in Nvidia’s favor, as she angles for upside over estimates for the second half of fiscal 2018, calling for the semiconductor player to yield revenue hitting the top-end of outlook circling $2.35 billion.
Forecasting “another fall season of must-have video games” and a slew of Vega announcements indicating double-digit quarterly gains ahead in Data Center, the analyst is even more confident on the giant, maintaining a Buy rating on NVDA stock while boosting the price target from $181 to $205, which represents a close to 13% increase from where the stock is currently trading. (To watch Hees’ track record, click here)
Hees notes, “We believe in FQ3 NVDA will benefit from an impressive slate of releases of fall video games driving better-than-expected demand for GeForce GTX series GPUs, continued demand from crypto currency mining, and broad adoption of Voltabased V100 GPUs pushing Data Center back to double-digit QoQ revenue growth.” With this in mind, the analyst is lifting her expectations for Nvidia to yield $1.11 in EPS and $2.39 billion in revenue for the third fiscal quarter as well as $1.21 in EPS and $2.50 billion in revenue for the fourth fiscal quarter of 2018, more bullish than the Street.
Additionally, PC gaming is a huge strong point for Nvidia, as the analyst asserts: “We believe with the upgrade cycle of gamers to Pascal-based GeForce GPUs in early innings that NVDA is poised to benefit from another impressive slate of fall video game releases including Destiny 2, Call of Duty: WWII, Star Wars: Battlefront 2, and Middle Earth: Shadow of War. NVDA’s website notes that GeForce GTX 1080 Ti and 1070 are currently out of stock, which we view as positive signs of strong demand.”
In terms of mining, the analyst concludes ether will not just be a “one trick pony,” finding demand still looks good: “While we have been cautious on the adoption of crypto currencies like bitcoin, our checks point to mining demand for ether tokens remains intact […]”
Wall Street is largely buying into what Nvidia has to offer, as TipRanks analytics exhibit NVDA as a Buy. Out of 25 analysts polled by TipRanks in the last 3 months, 15 are bullish on Nvidia stock, 7 remain sidelined, and 3 are bearish on the stock. With a loss potential of nearly 7%, the stock’s consensus target price stands at $169.00.
Intel’s Notebooks Are Going Strong
Intel Corporation (NASDAQ:INTC) could also be looking at a strong fiscal third quarter print for 2018, thanks to souped-up Notebook gains.
With the fourth fiscal quarter glimmering with exciting potential as NAND remains on the rise, top analyst Vijay Rakesh at Mizuho has higher expectations for the chip giant, reiterating a Buy rating on shares of INTC while bumping up the price target from $42 to $45, which implies a 13% increase from where the stock is currently trading.
Rakesh writes, “We believe INTC could see a better SepQ with Notebooks up ~10% q/q and ramping of the iPhone modems. We also expect continued strength into the DecQ with NAND ramps, the MBLY close and continued iPhone modem ramp. While focus on the earnings call will likely be on Data Center strength, new server ramps with Purley/Skylake and a lowered Data Center growth expectations of HSD y/y could make earnings expectations more achievable.”
Considering Notebooks make up a third of revenue, the upgrade in performance is key: “We believe overall PC NBs (~35% of revenue) are trending better in SepQ with new product launches and better consumer/corporate demand.”
At the end of the day, a lot of investor attention will be peeled to Data Center growth, as Rakesh surmises, “Focus on SepQ/DecQ will likely also be on INTC’s DCG. We believe some of the new product ramps with Purley/Skylake and Knights Landing could provide some upside, combined with a more achievable HSD y/y growth expectation in DCG though DCG OM could be under pressure with R&D. INTC has noted its Cloud/ Networking continues to grow, offset by challenges in Enterprise DCG growth.”
Vijay Rakesh has a very good TipRanks score with a 74% success rate and a high ranking of #28 out of 4,695 analysts. Rakesh garners 26.7% in his yearly returns. When recommending INTC, Rakesh gains 12.2% in average profits on the stock.
Cautious optimism circles this semiconductor company, as TipRanks analytics exhibit INTC as a Buy. Based on 26 analysts polled by TipRanks in the last 3 months, 12 rate a Buy on Intel stock, 10 maintain a Hold, while 4 issue a Sell on the stock. The 12-month average price target stands at $39.76.