Nvidia's 'crypto overhang' appears to be over. Here's what Wall Street is saying about Nvidia's Q1 results.

  • Nvidia on Thursday reported better-than-expected first quarter results.
  • Revenue guidance for the second quarter was also ahead of expectations.
  • Wall Street analysts were positive on Nvidia following the results.
  • Watch Nvidia trade live.

Nvidia on Thursday evening reported better-than-expected first-quarter results, sending shares up more than 5% after the closing bell. They were set to open little changed on Friday.

The chipmaker earned an adjusted $US0.88 a share on revenue of $US2.22 billion, topping the $US0.81 and $US2.19 billion that analysts surveyed by Bloomberg were expecting.

“NVIDIA is back on an upward trajectory,” said cofounder and CEO Jensen Huang. “We’ve returned to growth in gaming, with nearly 100 new GeForce Max-Q laptops shipping. And NVIDIA RTX has gained broad industry support, making ray tracing the standard for next-generation gaming.”

Looking ahead to the second quarter, Nvidia sees revenue of $US2.55 billion at the midpoint, plus or minus 2%. That was better than the $US2.53 billion that analysts were hoping for.

Here’s what Wall Street analysts are saying about the results:

JPMorgan: ‘Solid Q1 Results/In-line Guide on Return to Normalized Gaming Demand; Datacenter On-Track for 2H19 Recovery’

Price Target: $US205

Rating: Overweight

“Although GPU channel inventories have largely normalized in the April quarter, gaming growth also appears to be held back somewhat by the well-known notebook CPU shortages, impacting the initial ramp of its notebook business,” analyst Harlan Sur wrote.

“However, we expect seasonal growth in Gaming (augmented by ramp of 2nd gen Nintendo Switch) for the remainder of the year. In datacenters, the team noted that the July quarter guidance was softer than what they had originally anticipated due to large CSPs going through a period of digestion.

“However, we believe this view was largely expected as other large compute semiconductor companies such as Intel have guided towards a later recovery during their recent earnings call as well, and pointing to more of a 3Q and onwards type recovery with stronger growth in 2020.”

Susquehana: ‘Getting Back on the Rails’

Price Target: $US215

Rating: Positive

“Somewhat surprising, implied Gaming guidance beat our expectations, helped in part by a strong return of Nintendo Switch sales as the Japanese company is expected to launch a cost-reduced version of the device,” analyst Christopher Rolland wrote.

“While CPU shortages weighed a bit, management announced 100 notebook wins as their new laptop parts gain further traction (up from 40 announced at CES). While we previewed the many issues with GPU in the Data Center in C1H19 (primarily hyperscale digestion), we were positively surprised by the strong narrative around a ramp in their T4 inferencing product.

He concluded: “Overall, it has been a harrowing few quarters, but we remain long-term bulls on NVDA, as we believe in the A.I. inference opportunity, proviz upgrade cycle, and 7nm refresh coming this fall.”

Jefferies: ‘Reset is Healthy- Buy the Confession’

Price Target: $US210 (previous $US227)

Rating: Buy

“We continue to believe that NVDA will benefit from the secular drivers we outlined in our “4th Tectonic Shift in Computing” thesis, namely around demand for parallel processing in gaming, datacenters, autos and enterprises,” analyst Mark Lipacis wrote.

“In the near term, we view management lowering the bar as a positive and expect the stock to appreciate as visibility improves and order rates increase.”

RBC Capital Markets: ‘Keep Playing Games With Your Heart’

NvidiaNvidia CEO Jensen Huang.

Price Target: $US200

Rating: Outperform

“Gaming came in ~$US100M ahead of expectations which was close to our expectations,” analyst Mitch Steves wrote.

“Negatively the pause in Data Center appears to be a bit longer, with the Company talking down expectations q/q and taking full year guidance off of the table. Notably, we think this is conservatism and if we were to take the long-term investor view, having the Data Center business snap back ~2 months later than expected is immaterial to the story.”

He added that there are three focus questions: “1) if data center is down q/q next quarter and is growing y/y, how do we think about 2020 numbers if AMAT is suggesting DC growth); 2) can NVDA snap up to $US1.3B in gaming revenue and exceed expectations of a normalized run-rate closer to $US1.25B and 3) if opex is growing at high single digits in 2020E, will this continue in 2021 or increase back to double digits.”

SunTrust Robinson Humphrey: ‘NVDA backs off big 2H recovery, but this aligns with our model; Thesis intact’

Price Target: $US210

Rating: Buy

“The crypto overhang appears done and gaming is returning to q/q growth – a pleasant surprise to us,” analyst William Stein wrote.

“NVDA rescinded its full-year sales guidance of “flat to slightly down” provided on the previous conference call; however, this was not much of a surprise as neither we nor consensus modelled such a strong 2H recovery,” he added.


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