Goldman Sachs analysts agree that it is a good time to be an investor in tech leaders Apple Inc.(NASDAQ:AAPL) and NVIDIA Corporation (NASDAQ:NVDA). With Apple gearing up to outclass expectations and NVIDA riding an electric wave of Datacenter momentum, analysts are highlighting bull cases for these two stock giants. Let’s take a closer look:
Expect Apple Beat and Bumped Up Estimates
Goldman Sachs analyst Simona Jankowski is giving investors a heads up: a beat, albeit a “modest” one is coming for Apple, with consumers hankering to buy the elite 10th anniversary edition of the iPhone model come fall.
Therefore, ahead of the print, analyst reiterates a Buy rating on shares of AAPL with a $150 price target, which represents a just under 6% upside from where the stock is currently trading.
For the second fiscal quarter of 2017, the analyst expects revenues of $53.6 billion and EPS of $2.08, even more bullish than consensus estimates of $52.9 billion and EPS of $2.02, as Jankowski eyes prospective upside in Services and Other.
For the third fiscal quarter, the analyst anticipated a revenue guide between $44 billion and $46 billion from the AAPL management team as well as gross margin between 37.5% and 38.5%, just under consensus of $45.6 billion and 38.1%. “Even though some suppliers missed 1Q expectations, our supply chain tracker […] is directionally positive for iPhone estimates,” adds Jankowski, not the least bit concerned. Additionally, the analyst predicts a capital return program boost to the tune of $45 to $50 billion.
From a largely confident perspective, anticipating a “modest beat,” “We preview Apple’s F2Q (Mar) quarter, and include a survey of 1,000 US consumers that addresses forward purchase intentions for the iPhone into the June quarter as well as an early indication of demand for the iPhone 8 cycle this fall. The bottom line is that we see modest upside to consensus for the March quarter with inline June guidance, and expect continued upward estimate revisions to consensus estimates coming out of the call,” Jankowski contends.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Simona Jankowski is ranked #436 out of 4,556 analysts. Jankowski has a 64% success rate and realizes 10.5% in his annual returns. When recommending AAPL, Jankowski yields 24.7% in average profits on the stock.
TipRanks analytics exhibit AAPL as a Buy. Out of 37 analysts polled by TipRanks in the last 3 months, 28 are bullish on Apple stock, 7 remain sidelined, and 2 are bearish on the stock. With a return potential of nearly 8%, the stock’s consensus target price stands at $152.79.
The Street Continues to Underestimate NVIDIA
Goldman Sachs analyst Toshiya Hari is “sizing the AI opportunity” for NVIDIA and likes what he sees, confident that all signs point to the bullish train steaming right along for the chip giant.
In reaction, the analyst reiterates a Buy rating on NVDA with a price target of $130, which represents a close to 34% increase from where the shares last closed.
From the analyst’s standpoint, “Recent partnership announcements with Tencent and IBM point to continued momentum in NVDA’s Datacenter business, in our view, and also illustrate the growing demand for AI services. Of the key segments, we believe the Street continues to under-appreciate the growth potential we see in the Datacenter business and the positive mix shift it could drive given above-average gross margins. Outside of the data center business, we update our forecast methodology in NVDA’s automotive segment in order to capture revenue on the basis of infotainment, ADAS, and mass market AI computer contribution, rather than on the basis of luxury, nonluxury, and TSLA autopilot contribution. In addition we tweak our VR assumptions, baking in a GPU-to-VR headset attach rate to better capture adoption trends in the VR space.”
Ultimately, Hari believes that “recent price weakness based on near-term concerns (i.e., a potential deceleration in Gaming and an ‘air-pocket’ in Datacenter) presents an attractive buying opportunity, particularly for long-term investors,” and encourages shareholders to take note.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Toshiya Hari is ranked #1,083 out of 4,556 analysts. Hari has a 63% success rate and earns 12.3% in his annual returns. When recommending NVDA, Hari gains 22.9% in average profits on the stock.
TipRanks analytics demonstrate NVDA as a Buy. Based on 25 analysts polled by TipRanks in the last 3 months, 13 rate a Buy on NVIDIA stock, 7 remain sidelined, and 5 are bearish on the stock. The 12-month average price target stands at $114.48, marking a nearly 18% upside from where the stock is currently trading.