Friday, May 4, 2018

NVIDIA Reports Earnings Thursday: We're Bulled Up

NVIDIA reports Thursday after the close. As you'll see in our earnings model we have multiple catalysts that can drive earnings upside. We'd expect a positive reaction to earnings.

All Eyes On Gaming

NVIDIA's gaming line-item is the point of contention. Gaming makes up about 50% of NVIDIA's revenues so is their most important profit driver. Gaming is typically down seasonally from Q4. The last few years it was down in Q1 from Q4 9% - 24%.

Bears have been saying the "Gaming" line-item has been driven by crypto which is a risky and volatile business. Even though crypto probably did drive their gaming business we think any falloff in crypto mining demand could get met with gamer demand. Miners were hogging supply. So any crypto weakness can be offset by gamer demand finally getting filled.

If the Gaming revenue line-item is down low teens or less, crypto bears have no story and need to cover.

Datacenter Surprise

NVIDIA's darling business Datacenter has been on a strong sequential growth trajectory. April quarters have shown an acceleration the last few years.  If so, we think that would blow away Street estimates. Datacenter grew 23% last quarter sequentially. Anything higher would be blow out.

NVIDIA Chart

Source
NVIDIA's chart broke an uptrend which can be worrisome. But as we pointed out with Facebook, a clean break above a key level would be very bullish. Facebook broke above that level on earnings and we think NVIDIA has the shot to do it too.

AMD And Intel

Both AMD and Intel reported strong earnings.  Intel reported an acceleration in their datacenter business. Both companies reports speak to a strong environment which NVIDIA leads.

Conclusion

We're all bulled up on NVIDIA and expect a strong reaction on earnings.  We also have over 50% stock price upside making us bullish for earnings and thereafter.





SUBSCRIBE





All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. Model portfolio trades and positions are hypothetical to be used for directional analysis and ratings purposes. Elazar and its employees do not take individual stock positions to avoid front running and other potential customer related issues.

No comments:

Post a Comment

Comment here: