Next Tuesday, Nvidia (NVDA) will hold its annual Analyst Day. Deutsche Bank’s Ross Seymore expects the chip giant to deliver a “characteristically positive message.”
The analyst thinks the company will showcase a multitude of industry-leading developments across its various segments.
For Data Center, having called for a $100 billion TAM (total addressable market) figure by 2024 at the 2020 Analyst Day, Seymore will be hoping for an updated figure for the projected TAM. An update on the way forward for the Cloud business will also come in handy, following the doubling of revenue last year with Nvidia’s AI products in high demand.
As for the main breadwinner, Gaming, given the ongoing shortages that have overshadowed the “roll-out” of the Ampere based RTX 30 line of gaming GPUs, an update here will also be useful.
“While the ramp of this product line has seemingly been very strong,” the 5-star analyst expounded, “we look for the company to provide an update on sustainability of demand, supply trends, as well as any risk of crypto overhang (note increased risk language around crypto in recent quarterly filings/transcripts).”
With an “inflection” in revenue growth anticipated this year, Seymore expects more color on the trajectory of the Automotive pipeline – last valued by Nvidia at around $8 billion – with the company having already announced two “significant software revenue-share wins.” One is with Mercedes Benz (launch expected in 2024+) and the other with Jaguar Land Rover (launch 2025+).
So, looking pretty good for a sentiment boosting event, right? Maybe, but in the current environment, Seymore is keeping a lid on expectations.
“Despite the likelihood of a positively-toned analyst meeting, we expect the meeting to have relatively little impact on the stock itself, as NVDA's shares are more likely to be influenced by market dynamics in the near term (macro/geopolitical volatility lowering/raising investor risk appetite) rather than its own fundamentals,” the analyst summed up.
NVDA shares have had an uncharacteristically bad start to the year, with Seymore admitting the valuation is starting to “look more appealing.”
However, fears the sector has reached a cycle peak, along the market's current "risk-off" appetite, result in Seymore reiterating a Hold rating, backed by a $285 price target. Nevertheless, there’s upside of ~10% from current levels. (To watch Seymore’s track record, click here)
Looking at the consensus breakdown, most analysts disagree; 3 others join Seymore on the sidelines, but with 17 additional Buys, the stock boasts a Strong Buy consensus rating. The average target currently stands at $352.65, suggesting shares could rise by 44% over the next year. (See NVDA stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.