Nvidia (NVDA) delivered better-than-expected fiscal Q3 2022 results, characterized by record revenue. Earnings and revenue topped consensus estimates, driven by growth in the Gaming, Data Center, and Professional Visualization market. NVDA shares fell 3.12% to close at $292.61 on November 17.
Nvidia is a U.S. company that designs, manufactures, and sells computer graphics processors, chipsets, and related multimedia software.
Q3 ResultsThe company delivered record quarterly revenue of $7.10 billion, up 50% year-over-year exceeding consensus estimates of $6.83 billion. The Gaming unit posted record revenue of $3.22 billion, up 42% year-over-year, while Data Center revenue grew 55% to $2.94 billion.
The Professional Visualization segment also posted record revenue of $577 million, up 144% from the same quarter last year. The Automotive segment, on the other hand, delivered an 8% year-over-year increase in revenue to $135 million.
Nvidia posted non-GAAP diluted EPS of $1.17, up 60% from the same quarter last year, exceeding the consensus estimate of $1.11. (See Top Smart Score Stocks on TipRanks).
Q4 OutlookDuring the quarter, Nvidia paid cash dividends amounting to $100 million. It is also slated to pay a quarterly cash dividend of $0.04 a share on December 23, 2021, to shareholders on record as of December 2, 2021.
For Q4, the company expects revenue of $7.40 billion, plus or minus 2%. The company also expects non-GAAP gross margins of 67%, plus or minus 0.5%.
Stock RatingRecently, Mizuho Securities analyst Vijay Rakesh reiterated a Buy rating on the stock with a price target of $335, implying 14.49% upside potential to current levels.
Consensus among analysts is a Strong Buy, based on 20 Buys and 2 Holds. The average Nvidia price target of $334.95 implies 14.5% upside potential to current levels.
NVDA scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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Nvidia (NVDA) keeps going from strength to strength and according to Wall Street’s most prominent NVDA bull, when the company reports the October quarter’s results today (after market close), investors are in for another treat.
“We expect Nvidia to report October quarter sales better than both our/consensus estimates of low single-digit sequential growth,” said Rosenblatt’s 5-star analyst Hans Mosesmann. “We see the October quarter being driven by strength in all end-markets, with Data Center seeing accelerated demand and CMP revenues being minimal.”
Mosesmann anticipates non-GAAP EPS will come in higher than both his and the Street’s $1.10/$1.11 estimate.
Although the impact of crypto mining on the gaming segment is still “an area of concern,” Mosesmann believes the chip giant has been successful in “mitigating RTX GPUs in crypto mining by limiting performance in such workloads.” As such, crypto revenues will be kept to a minimum and the analyst expects “strong gaming demand” to result in a mid-single-digits quarter-over-quarter uptick for the Gaming segment. Sequential growth in both compute and networking, in addition to Mellanox, should drive high single-digits growth for the Data Center segment.
Looking ahead to the January quarter, Mosesmann expects the company will guide above both his and the Street’s forecast of flat to low-single-digit sequential sales growth and EPS of $1.12/$1.08, respectively. The continued adoption of Ampere and hyperscaler spending should drive strong data center sales. The quarter should also see growing ray tracing adoption and “continued momentum” in the Automotive segment.
What should investors look out for during the call? Any comments on Nvidia’s plans for the Omniverse, how the Grace CPU/3-product strategy is moving along, what’s the situation with the ARM acquisition, and the anticipated duration of the supply chain shortages.
Overall, despite another huge share haul this year (up 127%), according to Mosesmann, NVDA stock has more fuel left in the tank; the analyst’s Buy rating is backed by a Street-high $400 price target, suggesting shares will climb 35% over the next year. (To watch Mosesmann’s track record, click here)
While Nvidia retains most of the Street’s support, with a Strong Buy consensus rating based on 20 Buys and 2 Holds, other analysts are less certain the shares have more room to run; the $298.16 average target, suggests shares will stay range-bound for the foreseeable future. It will be interesting to see whether the analysts downgrade their ratings or upgrade price targets after the earnings release. (See NVDA stock analysis)
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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.