Nasdaq NVDA Nvidia

Nvidia beat earnings expectations on Wednesday as the graphics processing card company reported 4Q FY21 diluted earnings per share (EPS) of $3.10 compared to analysts’ estimates of $2.81. Revenue for the quarter came in at $5 billion, up by 61% year-on-year versus the consensus estimate of $4.82 billion.

However, shares of Nvidia (NVDA) dropped 2.2% in extended trading on Wednesday as the company’s founder and CEO, Jensen Huang, told analysts on an earnings call that he does not expect the selling of processors to cryptocurrency miners to become a large part of the business. “I think that this is going to be a part of our business. It won't grow extremely large no matter what happens.”

Huang was referring to the Nvidia Cryptocurrency Mining Processor (CMP) that was introduced around a week ago and increases the efficiency of mining the Ethereum cryptocurrency.

Huang said about NVDA’s fourth quarter earnings, “Q4 was another record quarter, capping a breakout year for NVIDIA’s computing platforms. Our pioneering work in accelerated computing has led to gaming becoming the world’s most popular entertainment, to supercomputing being democratized for all researchers, and to AI emerging as the most important force in technology.”

The company’s data center and gaming market platforms saw the biggest jump in year-on-year 4Q revenues growing 97% and 67% respectively due to stronger demand as more people have been working, learning, and playing from home due to the COVID-19 pandemic.

The company will pay its quarterly cash dividend of $0.16 per share on March 31 to all shareholders of record on March 10, 2021.

For 1Q FY22, the company expects revenues to be $5.3 billion with most of the quarter-on-quarter revenue growth driven by the gaming platform. (See Nvidia stock analysis on TipRanks)

Before the announcement of earnings, Rosenblatt Securities analyst Hans Mosesmann reiterated a Buy and a price target of $650 on the stock (12% upside potential)

Mosesmann said, “We see the January quarter being driven by strength in Gaming, Professional Visualization, and a continued recovery in Automotive offset by a sequential decline in Data Center, while the outlook will likely see continued adoption of Ampere and the recently announced Ampere featured laptops, strength in AI and cloud computing verticals, better than expected Gaming, and Automotive growth.”

“We are keen on understanding the visibility the company has in data center in particular, supply chain shortage duration, and controls on cryptocurrency mining using GPUs [graphics processing unit].We see NVDA as the best managed and strategically positioned semiconductor company with secular growth prospects driven by AI and a multi-year data center GPU compute cycle, gaming, a product shift to the data center in the near-term, and Automotive (in the long-term),” Mosesmann added.

The rest of the Street is bullish on the stock with a Strong Buy consensus rating based on 13 Buys and 2 Holds. The average analyst price target of $633.80 implies upside potential of around 9% to current levels.

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Nvidia (NVDA) stock has been a winner in the pandemic era. The semiconductor giant represents a play on multiple trends including AI, cloud, gaming and AV/ADAS, and investors have bought into the story, sending shares up by 110% over the past 12 months.

The company is set to release the January quarter results today after the bell, and Rosenblatt analyst Hans Mosesmann expects Nvidia to post a “beat and raise.”

“We see the January quarter being driven by strength in Gaming, Professional Visualization, and a continued recovery in Automotive offset by a sequential decline in Data Center,” the 5-star analyst said. “While the outlook will likely see continued adoption of Ampere and the recently announced Ampere featured laptops, strength in AI and cloud computing verticals, better than expected Gaming, and Automotive growth.”

Mosesmann expects sales in the longer 14-week quarter to be above his and the Street’s forecast for low single-digit sequential growth, with EPS also coming in higher than his $2.80 forecast and the consensus estimate of $2.81.

Nvidia’s main breadwinner, Gaming, should rise mid-single-digits quarter-over-quarter, driven by “continued ramp of the RTX 30 series, products, work-from-home demand dynamics, and game console SoCs.”

Of the company’s fast-growing division, Data Center, the analyst anticipates a cooling off period with a pause to its rally and a sequential low single-digits decline. The outlook for the segment is a key area to watch on the earnings call, where Mosesmann will be keen to learn about the likely duration of supply chain shortages, which the analyst believes will continue beyond F2Q21, and “controls on cryptocurrency mining using GPUs.”

Additionally, over the next several quarters, the data processing unit will continue to be a focal point and is noted as another tailwind. All in all, Mosesmann makes no bones about his long-term prospects for the GPU heavyweight.

“We see NVDA as the best managed and strategically positioned semiconductor company,” the analyst summed up.

Accordingly, Mosesmann reiterated a Buy on NVDA shares and sticks to a $650 price target, which implies a 14% upside from current levels. (To watch Mosesmann’s track record, click here)

Most of Mosesmann’s colleagues back his stance. With 12 Buys vs. 2 Holds, the stock qualifies with a Strong Buy consensus rating. The average price target is just under Mosesmann’s, and at $629.79 represents upside of 11% over the next 12 months. (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.