Thursday, May 10, 2018

NVIDIA Earnings Preview: Here's All That Matters

NVIDIA reports earnings tonight with a webcast at 5 PM. They had a blowout quarter and guide last quarter. We expect a good quarter and a higher guide but there are some special catalysts that can help this stock break out to new highs with conviction.

Here's Almost All That Matters... Gaming

Crypto-NVIDIA-bears thought that Gaming's Q4 strength was driven by crypto miners and that Q1 will be weak.  They thought the same thing on AMD and were clearly wrong as we expected.

Here's the 'all-that-matters' line-item, Gaming...

Calendar 2015 2016 2017 2017 2018
Fiscal 2016 2017 2018 2018 2019

Q1 Q1 Q1 Q4 A Q1 E

Apr Apr Apr Jan Apr
Gaming 587 687 1027 1739 1597
QTQ -9.1% -15.2% -23.8% 11.4% -8.2%

We show you the last few years of sequential growth (Sequential means the April quarter compared to January, not last year's April.).  If crypto drove Q4 and if crypto slowed in Q1, we'll see it show up here in Gaming revenues.

You see that the last few years' April quarter was lower than the January quarter by anywhere from 9% to 24%.  If the April quarter can be in the better part of that range, the crypto-NVIDIA-bears have no story. Sorry bears.

That's what to watch and almost all that matters (for NVIDIA anyway).

Here's The Boring Also-Ran Of What Matters Tonight, Datacenter

We like Elon Musk so we stole his "boring." But anybody remember this Datacenter business?  All the talk's been about how crypto prices are down and now miners are not buying GPUs.

First, we obviously think that may be off.

In the cloud of noise did everybody forget this huge Datacenter story?

Here's Datacenter's sequential numbers in the April quarter...

Calendar 2016 2017 2017 2018
Fiscal 2017 2018 2018 2019

Q1 Q1 Q4 A Q1 E

Apr Apr Jan Apr
Datacenter 143 409 606 777
Datacenter QTQ Growth 47.4% 38.2% 21.0% 28.2%

Notice anything special here?  The April quarter has been blow-out the last couple of years up 38% and 47%.  Last quarter Datacenter was up 21%. Could you imagine if this April quarter (say in a sing-song) that's about to be reported after the close is anything like past April quarters??

Anything up 10-20% sequentially would be very respectable.

But, oh my, this is where we think the big surprise can come from in today's report.  If this quarter's sequential growth shows up similar to the last couple of years, look out. This could get fun.

Chart. Rally Caps

NVIDIA bulls are going to be using a little old-fashioned bowling body-English today. The stock is just starting to break out to new all-time highs.

Here's the chart.

Source
Get your rally caps.  A good quarter and a good guide can get this tech leader to break out with some conviction after the close today.

Conclusion

We're all bulled up. We have 44% stock price upside through this year.  We didn't start using 2019 earnings numbers yet. A continued strong performance in Gaming and Datacenter after the close today can get us that much closer. Rally caps.



Reading Comprehension
(This is a tough one)

The author of this article:
A) Hates baseball.
B) Doesn't really understand baseball.
C) Get's mixed up between baseball and American soccer.
D) Secretly has loved the Mets for way way way too long and knows every player in that picture link and will do anything he can to slip in some mention of the Mets even though it has nothing to do with NVIDIA.

No guessing, please. Answer in comments.






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