Major Catalysts for This
Earnings on Wednesday, May 26,
Nvidia is expected to release its Q1 fiscal 2022 results on May 26.
Previously, though, the company had already issued revenue guidance of $5.3
billion for the quarter, plus or minus 2%.
On Apr. 12, however, Nvidia announced that revenue for the quarter is
tracking above those projections. In addition, the company noted that it has
sufficient supply on hand to support sequential growth beyond Q1 — no small
feat during a global chip shortage.
2. Influence of Nvidia.....
Together, NVIDIA and Mellanox power eight of the top 10 supercomputers
in the world. Even more impressive, Italy's CINECA has selected NVIDIA GPUs
(and Mellanox networking) to power the world's fastest AI supercomputer, the
Leonardo. Once built, the system will deliver 10 exaflops of performance,
making it nearly 19 times faster than Japan's Fugaku, which currently tops the
list of the world's fastest supercomputers.
According to Cathie Wood's ARK Invest analysis, accelerators like NVIDIA
GPUs will displace central processing units (CPUs) as the dominant processors
in data centers by 2030, growing at 21% annually over that period. That opens
the door to a $41 billion market opportunity for the chipmaker.
Additionally, factoring in other use cases like enterprise and edge AI,
management believes its total addressable market in the data center sector will
actually hit $100 billion by 2024.
3. Arm-based Tegra.....
NVIDIA's Arm-based Tegra CPUs power infotainment and navigation systems
for high-end automakers like Audi and Lamborghini. They also power its Drive
onboard computers for autonomous vehicles.
NVIDIA generated 3% of its revenue from automotive chips last quarter.
That's just a tiny sliver of its business, and the unit faced severe headwinds
last year as the pandemic disrupted the production of new vehicles. The global
semiconductor shortage could further delay that recovery.
But after those headwinds wane, NVIDIA's automotive business should
recover and gradually account for a larger slice of its revenue. Until then,
NVIDIA should continue to generate high double-digit percentage revenue and
earnings growth as it sells more gaming and data center GPUs.
Cryptocurrencies are hot once again, which means that demand for
graphics processing units (GPUs) for crypto mining rigs is through the roof.
Nvidia has been through this cycle before and learned a painful lesson. Crypto
miners can be big business, but they compete against NVDA’s core customer base
for graphics cards. That results in bad PR when stock runs out. Plus, the
crypto market can dry up without warning. In 2018, this effect hammered NVDA
stock when miners suddenly stopped buying.
This time, though, the company is doing things differently and managing
the crypto market much more carefully. Acknowledging mining as an actual line
of business, NVDA created a GPU specifically for that market. Additionally, it
took measures to prevent miners from snapping up all its new consumer GPUs. New
graphics cards will automatically throttle performance if used for crypto
Nvidia’s new RTX 3000 series GPUs are still in short supply, but
consumers aren’t competing against crypto miners to buy them now. Meanwhile,
the new crypto cards are selling better than expected. In its Q1 earnings
update, the company noted that it has already sold $150 million worth, compared
to the projected $50 million.5. Acquisitions.....
Salesforce is in the midst of acquiring enterprise communications platform
Slack Technologies in a $27.7 billion cash-and-stock deal. Assuming the deal
closes, Slack will provide Salesforce with a jumping-off point to cross-sell
its CRM solutions to small-and-medium-sized businesses.
This product is a custom designed, Arm-based processor aimed at data
centers. NVDA says that its first data center CPU is optimized to deliver 10
times “the performance of today’s fastest servers on the most complex AI and
high performance computing workloads.”
Of course, Nvidia has always been about GPUs, so its first data center CPU
is a shot across the bow of PC processor leaders. If Grace lives up to claims,
it has the potential to significantly grow Nvidia’s data-center market. Back in
Q4, that market brought in $1.9 billion.
Nvidia announced new devices across its portfolio and launched a new bit of
gaming software. To begin with, the company unveiled a new wave of gaming
laptops, flaunting its latest GPUs. This was followed by the reveal of new
collaborative laptops with the likes of Dell (NYSE: DELL) and other consumer
hardware names. On top of all that, Nvidia GPU owners now have access to
GeForce NOW, powering optimal cloud gaming experiences.
Baird analyst Tristan Gerra rates the stock an Outperform (i.e. Buy) along
with an $800 price target, which implies ~45% upside. The bull thesis is based
on "Nvidia’s strong near-term
positioning in AI data center markets and longer-term opportunities across many
accelerated computing applications."
"As Nvidia increasingly moves to
platform solutions targeting and enabling all AI markets, while diversifying
its architecture offering, the company is poised to over time dominate data
center. Omniverse gives us an early glimpse of a virtual 3D world which Nvidia
is at the forefront and ultimately yielding to a matrix computing world. More
near term, GTC-announced foray into CPUs will expand Nvidia's computing
TAM," Gerra opined.
Overall, no fewer than 27 analysts have put reviews on NVDA on record, and
of those, 24 are to Buy against just 3 to Hold. NVDA shares are selling for
$550.34; the average price target of $682.20 implies an upside of 24% from that