Last Minute Thought: Buy or Sell Nvidia (NVDA) Stock Before Earnings?


Near-term earnings noise and concern about Q3 numbers and the Q4 guide are warranted given broadly weakening fundamentals in the semi industry. However, this noise in Nvidia (NVDA) stock is ultimately a buying opportunity, at least if you ask RBC’s Mitch Steves.

Heading into the print this evening, Steves is taking a positive stance on Nvidia due to positive Data Center results. Steves believes the Data Center business will continue to grow in excess of expectations and Gaming softness is baked into the stock price at this time. Given this dynamic, the analyst views NVDA stock as oversold and, as such, reiterates a Buy rating on the stock, with a price target of $310, which implies an upside of 52% from current levels. (To watch Steves’ track record, click here)

Steves opined, “Over the past few months, we’ve seen a notable re-rating downward for the semiconductor industry. Overall, we think this reflects concerns around peak volumes but ignores the positive benefits of product cycle success and secular growth. Despite concerns surrounding volumes, we think Nvidia is being overly punished despite continuing to gain traction in the Data Center based on our checks. With this in mind, we think there are few secular growth stories in technology as solid as Nvidia, and notable growth in Oct-qtr could be a near-term catalyst to help the stock re-rate higher.”

Overall Steves anticipates the following:

  1. Upside from Data Center relative to Street expectations of $819 million.
  2. Gaming to be largely in-line with the Street at $1.9 billion.
  3. Crypto currency to have a negative ~$50 million impact on the total business.

Wall Street’s confidence backing the graphics-chip player is strong, with TipRanks analytics showcasing NVDA as a Strong Buy. Based on 27 analysts polled by in the last 3 months, 21 are bullish on Nvidia stock. The 12-month average price target stands at $286.16, marking a nearly 45% upside from where the stock is currently trading. (See NVDA’s price targets and analyst ratings on TipRanks)

 

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