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Why Investors Should Not Get Too Excited About Nvidia (NVDA) Stock Heading Into Earnings


This earnings season has seen quite a bit of fireworks and it isn’t over just yet. Nvidia (NASDAQ:NVDA) is scheduled to report fiscal second-quarter earnings after the closing bell on Thursday, August 16. Ahead of earnings, NVDA has been climbing closer to its all-time high of $269.20 it hit in mid-June.

Heading into the print, RBC Capital analyst Mitch Steves takes a more neutral stance on the results given the following dynamics:

1) We believe gaming demand is seeing some softness due to a product transition (Turing), which we anticipate will be launched at the end of August; 2) we think Data Center results will be largely in line with growth sequentially (higher than company growth) but unlikely a “blow-out” quarter due to summer spending seasonality; and 3) we think the margin line will continue to grow, showing EPS power due to mix shift to high-end products.

Overall, the analyst still views Nvidia as a core holding and notes that July quarter is generally a softer quarter from a seasonal perspective. While Steves takes a neutral stance on the print, he remains positive on Nvidia ahead of a new Turing product launch.

As such, Steves reiterates an Outperform rating on Nvidia stock, with a price target of $310, which implies an upside of 22% from current levels.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mitch Steves has a yearly average return of 25.5% and a 80.2% success rate. Steves has a 82.6% average return when recommending NVDA, and is ranked #176 out of 4850 analysts.

The initial word out on the Street echoes Steves’ bullish conviction on the GPU giant, as TipRanks analytics showcase NVDA as a Buy. Based on 25 analysts polled in the last 3 months, 18 are bullish on the stock, while 7 remain sidelined. The 12-month average price target stands at $294.68 marking a 16% upside from where the stock is currently trading.