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Nvidia (NASDAQ:NVDA) rose nearly 1% in premarket trading on Wednesday as Wall Street was impressed with the semiconductor giant’s third-quarter earnings and guidance, in spite of the exceptionally high expectations going into the print.
Bank of America analyst Vivek Arya said he thinks the Jensen Huang-led company is still in the first 25% of converting the roughly $250B global compute infrastructure to accelerated and artificial intelligence-centric computing. He now believes the company could earn as much as $40 per share in 2027, up from $32 per share prior to the results.
Arya boosted his price target to $700 from $650 after the results, but acknowledged the stock “could go through some near-term churn” after the 240% run year-to-date.
“Valuation at just 24x CY24E PE (and 10x [long-term] EPS power) seems remarkably low, in our view, relative to 30-35% CY23-27E sales and [earnings per share compound annual growth rate] potential, and best-in-class 65%+ EBITDA and 40%+ FCF margins,” Arya wrote.
On the negative side, Arya said the issues resulting from the expanded export control curbs on China are a “risk,” but it’s likely demand will still outpace supply going well into next year.
Looking ahead, Nvidia (NVDA) expects fourth-quarter revenue to be between $20B, plus or minus 2%, above the $17.9B that analysts had expected.
The company expects sales in China to decline “significantly,” citing the recent export curb controls from the Biden Administration. The decline will be offset by growth in other regions, Nvidia added.
Like Bank of America’a Arya, Citi analyst Atif Malik said the stock could be “range bound” as it goes through tougher year-over-year comparisons in the first-half of fiscal 2024, particularly for the data center.
Malik said that January’s Consumer Electronics Show, where the company is set to hold a “special address” and the company’s GTC conference in March are the “next major catalysts.” He maintained his buy rating and $575 price target on the stock.
Rosenblatt analyst Hans Mosesmann reiterated his buy rating and $1,100 price target on Nvidia (NVDA), calling the results and guidance “epic.”
Mosesmann said that the Grace Hopper super chip is already being positioned as a “multi-billion dollar business” for next year, while networking is on a $10B sales trajectory and software and services is on a $1B run rate of its own.
Wedbush Securities analyst Matt Bryson said the results from Nvidia show a “positive read through” for Super Micro Computer (SMCI) and Taiwan Semiconductor (TSM).
Bryson added that he believes Nvidia (NVDA) is set up for at least another quarter or two of similar results as demand continues to outpace supply.