Technology market whiz Gene Munster – from his research-driven, venture capital firm Loup Ventures – is out with an upbeat slice of perspective following an ‘intoxicatingly’ good quarterly print from NVIDIA Corporation (NASDAQ:NVDA).
Clearly, investors agree, as shares are flying 7% in trading today. After all, with Nvidia posting $2.9 billion against the Street’s $2.7 billion, and EPS of $1.72 soaring past the Street’s $1.16, that acts as a major needle mover in the market. This marks 34% year-over-year growth for the semiconductor player, and Munster is taking notice.
The fourth quarter results for 2017 showcase an enticing one-two punch of more rapid-fire as well as increasingly profitable growth, from where Munster is standing. In other words, the “results are further evidence of the magnitude of the opportunity ahead of Nvidia,” cheers the research analyst, who believes: “Its products are a foundational part of the future of technology, based on their use in data centers, autonomous vehicles, virtual and augmented reality platforms, cryptocurrency mining, and eSports. We remain believers in the long-term Nvidia story. While shares of NVDA are up 100% over the past year (market cap of $129 billion), we think there’s further upside given Nvidia’s foundational exposure to frontier technologies. Earnings and model recap.”
The company boasts a “pole position in three green field growth markets,” between gaming, datacenter, and automotive- which all present “open-ended growth opportunities,” writes Munster.
Gaming shot up 29% year-over-year for the quarter, with Nvidia earning $1.74 billion in revenue, riding a wave of “high-quality, hit games in the market.” Worthy of note, the research analyst calls attention to Activision’s new Overwatch league that had a launch just last month, reporting 10 million unique users in the opening week.
Munster explains, “The success of these games is leading to both an increase in the number of GPUs sold, as well as ASPs for Nvidia.” With cryptocurrency mining benefiting GPU demand and likewise lifting the company’s gaming segment performance, the analyst predicts that down the line, “the outlook for gaming remains promising.”
Meanwhile, datacenter revenues vaulted 105% year-over-year to a whopping $606 million. This is the seventh quarter in a row that the company’s datacenter segment has yielded growth spanning three-digits. Munster points to artificial intelligence investments as a key driver here- and “we’re in the early innings artificial intelligence.”
Automotive was the weakest of the segments, earning a 3% year-over-year jump to $132 million. However, Munster says with confidence, not to worry: “Despite little growth, remains Nvidia’s biggest opportunity.” Looking ahead, the leading short-term prospects point to the DGX system; the autonomous-geared DRIVE PX platform; and goals to establish development deals with leading OEMs, ride-hailing firms, startups, and tech firms to bolster efforts in the autonomy market. Looking ahead, by word of Munster’s crystal ball, this is a vastly underestimated market that could leap to 13% in accounting for revenue by 2023. By 2040, the analyst predicts 90% of vehicles driving will need a platform just like Nvidia’s DRIVE PX.
TipRanks showcases cautiously optimistic sentiment on the Street surveying the chip giant. Out of 23 analysts polled in the last 3 months, 11 are bullish on Nvidia stock, 11 remain sidelined, while 1 is bearish on the stock. With a return potential of 7%, the stock’s consensus target price stands at $247.33.