Is anything about to derail Nvidia’s (NVDA) growth momentum? The GPU leader is enjoying an extended moment in the sun, when just about everything is going its way. An excellent F1Q21 report, the latest highlight, resulted in additional brawn to its ever-bulging share price – by now up 45% since the turn of the year.
There’s more to come, argues Needham’s Rajvindra Gill, who calls Nvidia “the only perpetual growth story in semis.” The 5-star analyst has a Buy rating on Nvidia shares, accompanied by a $400 piece target. Expect additional upside of 17%, should the target be met over the next 12 months. (To watch Gill’s track record, click here)
COVID-19’s devastating impact has not impeded Nvidia’s forward charge. In fact, as evidenced by the earnings results, it has boosted the narrative for Nvidia’s two main segments – Gaming and Data Center.
The stay-at-home economy resulted in a 50% uptick for gaming hours on its GeForce platform. Overall, in the quarter, Gaming revenue (making up 43% of F1Q21 sales) increased year-over-year by 27% to $1.34 billion, beating the Street’s call for $1.31 billion.
But the really impressive numbers are reserved for Nvidia’s Data Center. Making up 37% of overall sales, the segment still trails Gaming as Nvidia’s top earner, yet throughout F20 the division had been closing the gap and the most recent showing continued the trend.
Data Center revenue came in at $1.14 billion, above the $1.08 billion estimate, exhibiting 80% year-over-year growth and up by 18% from the prior quarter’s results.
With the additional purchase of data specialist Mellanox completed, Gill expects “data center strength to continue throughout FY21.”
The 5-star analyst commented, “We believe data center, the end-market that we view as NVDA’s biggest growth engine, is experiencing a recovery as hyperscaler sales have ramped the past few quarters and visibility has improved. We expect the competitive dynamics in the data center market will exert pressure on its long-term positioning in this market; however, we believe several industries will transition to AI-based systems faster than before.”
The rest of the Street has no bones to pick with the Needham analyst’s assessment. A Strong Buy consensus rating is based on 1 Sell, 3 Holds and a towering 27 Buys. With an average price target of $381 and a change, investors stand to take home about 12% gain, should the target be met over the next 12 months. (See Nvidia stock analysis on TipRanks)