A Fresh Perspective on Nvidia: Positive Outlook for the Future
According to an analysis conducted by Susquehanna analyst Christopher Rolland, there is a positive sentiment towards Nvidia Corp (NASDAQ: NVDA), with a target stock price of $850 compared to the previous price of $625.
Rolland acknowledges that the company needs a fourth-quarter advantage of $1.58 per share and an estimated tax year 2025 revenue of $99 billion. The financial results report will be published on February 21.
The analyst expects improved performance and forecasts due to strong validation of GPU unit information for data centers.
When it comes to data centers (which currently generate over 80% of revenue), the demand for artificial intelligence (AI) remains high, thanks to better hyper-scale capital expenditure guidance and recent comments from Meta Platforms Inc. (NASDAQ: META) and Tesla Inc. (NASDAQ: TSLA) indicating continued purchases of key GPU units.
While some are concerned that the transition to B100 may pose a hurdle, Rolland notes that this is becoming less likely, although there might be a growth slowdown in the third quarter before the end of the year.
The analyst observed that the majority of H100 units have been assigned to Nvidia’s largest customers, with the remaining units to be delivered in the first quarter, giving him confidence in the first-quarter forecasts.
He emphasized that availability continues to be a challenge, but not as much as before, validating a 53% increase in purchase orders in the previous quarter, as well as CFO Kress’s assurance that availability will increase in each subsequent quarter throughout the year.
While the shift in product composition by exclusively focusing on H100 units has lesser impact on revenue and growth, Rolland estimates that the A100 share will drop from 8% in the fourth quarter to only 5% in the first quarter, as Nvidia strongly directs its attention to H100, resulting in almost a twofold benefit in ASP.
However, the change in product composition in the second quarter could be beneficial when Nvidia introduces the H200 to the market, followed by the long-awaited B100 in the fourth quarter.
Regarding the Gaming segment, Rolland expects the results to be in line with expectations or slightly better. The review of Advanced Micro Devices, Inc.’s (NASDAQ: AMD) graphics cards was positive, and Steam data indicates continued interest in the 40 series.
For the Pro Viz segment, the analyst anticipates continued high demand for computer offerings designed to work with Omniverse Al artificial intelligence technology.
Unfortunately, the outlook for the Auto segment is more pessimistic as Nvidia previously highlighted a decline in demand in the Chinese electric vehicle market, which may persist for a longer period, coupled with a global decline in demand for electric cars.
The analyst expects Nvidia to maintain strong gross margin power, but does not anticipate significant growth above 75%.
Frequently Asked Questions
1. What is the target stock price for Nvidia Corp?
Analyst Christopher Rolland states the target stock price is $850.
2. When will the financial results report of Nvidia Corp be published?
The financial results report of Nvidia Corp will be published on February 21.
3. What are the main sources of revenue for Nvidia Corp?
The main sources of revenue for Nvidia Corp are data centers, which currently generate over 80% of revenue.
4. Is there still a high demand for artificial intelligence (AI) in data centers?
Yes, data centers still have a high demand for artificial intelligence (AI), as indicated by hyper-scale capital expenditure guidance and comments from Meta Platforms Inc. and Tesla Inc.
5. Which GPU units are key for data centers?
The key GPU units for data centers are the H100 units.
6. What are the projected changes in the market share of A100 units?
The analyst forecasts that the market share of A100 units will decrease from 8% in the fourth quarter to 5% in the first quarter.
7. When will Nvidia introduce the H200 and B100 units to the market?
Nvidia will introduce the H200 units in the second quarter, followed by the long-awaited B100 units in the fourth quarter.
8. What are the expectations for the Gaming and Pro Viz segments?
The expectations are that the results for the Gaming and Pro Viz segments will be in line with expectations or slightly better.
9. What are the forecasts for the Auto segment?
The forecasts for the Auto segment are more pessimistic due to a decline in demand in the Chinese electric vehicle market and a global decrease in demand for electric cars.
10. What is the expected gross margin strength for Nvidia?
It is expected that Nvidia will maintain strong gross margin power, but significant growth above 75% is not anticipated.
Glossary:
- GPU – Graphics Processing Unit
- AL – Artificial Intelligence
- Meta Platforms Inc. – Company specializing in social media
- Tesla Inc. – Electric vehicle manufacturer
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