Technology

Why Analysts Are Chasing NVIDIA Secular Growth Trends

Chris Lange

Published: May 15, 2016 9:55 am

Last Updated: January 13, 2020 8:03 am

NVIDIA Corp. (NASDAQ: NVDA) reported its fiscal first-quarter financial results after the markets closed on Thursday, and investors and analysts alike loved this report. Overall the company set a positive direction with earnings and the product updates that it listed.

24/7 Wall St. has included some highlights from the earnings report, as well as what analysts are saying about NVIDIA after the fact.

The company posted $0.46 in earnings per share (EPS) on $1.31 billion in revenue. That compares to consensus estimates of $0.31 in EPS on revenue of $1.27 billion. In the same period of last year, the company reported EPS of $0.33 and $1.15 billion in revenue.

During this past quarter, the company launched GeForce GTX 1080 and GTX 1070, based on NVIDIA’s new Pascal architecture, bringing the biggest performance gains over the previous generation of processors in a decade.

The company also expanded the NVIDIA VRWorks software development kit with Simultaneous Multi-Projection, which heightens realism with new display capabilities, and VRWorks Audio, which delivers physically modeled positional audio.

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We are enjoying growth in all of our platforms — gaming, professional visualization, datacenter and auto. Accelerating our growth is deep learning, a new computing model that uses the GPU’s massive computing power to learn artificial intelligence algorithms. Its adoption is sweeping one industry after another, driving demand for our GPUs.

He added:

Our new Pascal GPU architecture will give a giant boost to deep learning, gaming and VR. We are excited to bring a new wave of innovations to the markets we serve. Pascal processors are in full production and will be available later this month.

A few analysts weighed in on NVIDIA after the report:

• Jefferies reiterated a Buy rating but raised its target price to $45 from $42. The firm said that its four secular trends thesis is just starting to play out and that NVIDIA remains one of its top picks.
• Barclays has an Underweight rating and raised its price target to $30 from $25.
• B. Riley raised its price target to $45 from $44.
• Canaccord Genuity has a Buy rating and raised its price target to $45 from $41.
• Deutsche Bank has a Hold rating and raised its price target from $30 to $32.
• JPMorgan has a Neutral rating and raised its price target to $39 from $33.
• Morgan Stanley has an Equal Weight rating and raised its price target to $32 from $30.
• RBC has a Sector Perform rating and raised its price target from $36 to $40.
• Topeka Capital raised it to Buy from Hold and lifted its price target to $44.
• UBS has a Buy rating and raised its price target to $43 from $40.
• Wedbush has an Outperform rating and raised its price target to $42 from $38.

Shares of NVIDIA were trading up 15.2% at $40.98 on Friday’s close. The stock has a consensus analyst price target of $37.08 and a 52-week trading range of $19.09 to $41.00.