A month after reporting a second consecutive earnings report that indicated weakness ahead, the stock is on a sustained uptrend. After holding the $140-$145 levels, the stock broke out and closed at $177.50 last week. What did markets like from Nvidia’s (NASDAQ:NVDA) presentation at the GPU conference?
Nvidia highlighted accelerated computing as the path forward. Data science is the new HPC challenge and has a high compute requirement. The next generation of HPC is with the CUDA-X ecosystem. Nvidia cited Amazon.com’s AWS and Mellanox as part of that ecosystem.
Gaming Market Strong
Despite the bust in cryptocurrency mining in 2018, Nvidia still benefited from a record year. RTX’s launch, MAX-Q laptops, and the Turing GPU to target the mainstream market will help the company grow its market share. In FY 2019, the 13%, or $6.25 billion total, revenue growth justifies the stock’s current valuation.
Headwinds
Nvidia, along with its competitor Advanced Micro Devices (NASDAQ:AMD), has a glut of GPU cards it must sell-through to cut inventory levels. Until then, high-end RTX GPUs may not sell as well as Nvidia wants. Fortunately, the supply glut is easing and will be back to equilibrium after this quarter.
Nvidia could continue its run into the $200 level. To hold that range, it needs a stronger earnings report in May.
