IDC reported weak first-quarter PC sales for 2022. Investors reacted by selling Nvidia (NVDA), AMD
(AMD), Intel (INTC), Dell (DELL), and HP Inc. (HPQ) stock. Sentiment reversed when Dell posted quarterly
results that exceeded estimates.
Among the PC suppliers and makers, Nvidia stood out the most.
Nvidia posted revenue growing by 46.3% Y/Y to $8.28 billion. The company reported exceptionally
strong revenue despite the supposed economic recession. NVDA stock trades at a P/E of nearly 50 times
and a forward P/E of 28x. The growth rates justify the valuation.
It earned $1.36 a share, albeit on a non-GAAP EPS basis. It posted record data center and gaming
revenue. This suggests that despite the lowered outlook, the long-term momentum will resume.
In Q2/2023, Nvidia expects revenue of $8.10 billion to $8.44 billion. The outlook includes a $500 million
cut in expectations due to Russia and the Covid lockdown in China. The GPU supplier expects strong
gross margins of 65.1% (GAAP).
Opportunity
Nvidia’s RTX refresh to the 4000 series is a catalyst for its PC gaming business. In servers, it posted a
record revenue of $3.75 billion, up by 83% Y/Y and 15% Q/Q. Demand for servers will not slow down. AI,
machine learning, and metaverse are just a few markets supporting Nvidia’s long-term growth.
