Nvidia (NVDA) hosted an Investor Day last week, one that had increased importance as the company’s stock has dropped more than 50% since its 2018-high.
Based on analyst responses and a quick uptick in share prices, Nvidia did a good job conveying a positive message on the health of its company. The company said that inventory challenges it faced in late-2018 were behind them, as it remains confident that growth will continue coming from auto, data-centers and gaming. While investors have generally had confidence in Nvidia’s long-term potential, it has been the short-term questions that have dogged the stock. With these seemingly being past the company, good times are ahead.
Tigress analyst Ivan Feinseth agrees with this premise, as he continues to rate the company a Buy. (To watch Feinseth’s track record, click here)
Speaking on data centers, Feinseth says Nvidia’s acquisition of Mellanox “increases [its] data center capabilities and reduces dependence on gaming.” The company acquired Mellanox Technologies earlier in March for $6.9 billion, as Feinseth believes the company expanded “its expertise in the growing data center components market.” Furthermore, “the acquisition will further accelerate NVDA’s integration of its GPUs in data centers driving faster innovation and processing of data, and integrating AI capabilities in large databases.”
On its Turing Architecture, Feinseth points out this is “driving the next generation of GPU technology.” The analyst believes it “enables real-time graphic ray tracing which is a rendering technique for generating images by tracing the path of light as pixels in an image plane and simulating interactions with virtual objects. It increases the capabilities of producing very high degrees of visual realism which has many applications including e-sports, gaming, and in computer-generated video production.” This product will be increase offerings to media and entertainment, and manufacturing industries, among others.
Feinseth remains bullish on NVDA stock “as new data center opportunities along with an expected turnaround in gaming GPUs in the second half of this year will overcome near-term headwinds.” The analyst says, “recent weakness from macro headwinds and a significant drop in demand from crypto mining will start to turn later in this year,” which will provide a boost to its stock. Furthermore, “NVDA continues to evolve into a platform provider with expertise in graphics processing, computing, and deep learning. GPUs for gaming and artificial intelligence for high-performance computing and cloud data centers are NVDA’s key growth drivers.”
All in all, Nvidia, which was one of Wall Street’s hottest stocks for much of the past few years, hit a few speed bumps in 2018. But the analyst community is still optimistic about the company in the long run. TipRanks analysis of 32 analyst ratings on Nvidia shows a Moderate Buy consensus, with 21 analysts recommending Buy, ten recommending Hold and one saying Sell. The average price target is $188.38, representing a 9.5% upside to current levels. (To see NVDA’s price target on TipRanks, click here)
Read more on NVDA:
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