Nvidia (NASDAQ: NVDA) is fast approaching its yearly highs again after the company reported quarterly results that impressed analysts. Analysts hiked NVDA stock price targets.
Goldman Sachs (NYSE: GS) raised its PT on NVDA stock to $310, citing a fall in cryptocurrency-related revenue. The analysts sees crypto revenue losses as a good thing, citing a de-risking in revenue. Instead, new products for gaming will set the company towards strong revenue from GPUs again.
Nvidia has plenty of growth drivers. Crypto is still a driver but so is autonomous cars, cloud services, and gaming. Valuations are not compelling at a 35 times forward P/E but the company’s future growth is undeniable strong. Nvidia earned $2.05 a share in Q1, beating estimates by $0.39 a share. Revenue rose a whopping 65.5% to $3.21 billion, beating consensus by almost 10%.
The most impressive number in Nvidia’s result is the 1.4% sequential increase in gross margins. Still, the profitability may not impress bulls enough to push the stock higher in the near-term. EPS and revenue must catch up to P/E multiples, which is around 55 times. Shorts could start betting against the stock on valuation, as short float is a mere 2.49%.
Nvidia said it expects revenue to be $3.1 billion in the second quarter. Operating expenses will be around $850 million (GAAP).
Gamers vs. Crypto
On the conference call, Nvidia said the GPU pricing should fall, bringing back buying from gamers:
"I think that a lot of the gamers weren't able to buy into the new GeForce as a result. And so we're starting to see the prices come down. We monitor spot pricing every single day around the world. And the prices are starting to normalize. It's still higher than where they should be. And so obviously, the demand is still quite strong out there."
