NVIDIA Corp (NVDA)

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Gaming Demand, China Concerns, Data Center Records: 5 Nvidia Analysts Have Mixed Reactions To Q3 Earnings
BY Benzinga — 11:24 AM ET 11/17/2022

Technology giant NVIDIA Corporation NASDAQ:NVDA beat revenue estimates from analysts and came up short on earnings per share, according to its third-quarter financial results.

Here are what analysts are saying after the report:

Goldman Sachs analyst Toshiya Hari has a Neutral rating and a price target of $162.

Rosenblatt analyst Hans Mosesmann has a Buy rating and a price target of $320.

Raymond James analyst Melissa Fairbanks has a Buy rating and lowers the price target from $210 to $190.

Needham analyst Rajvindra Gill has a Buy rating and raises the price target from $155 to $200.

Mizuho analyst Vijay Rakesh has a Buy rating and lowers the price target from $205 to $200.

The Analyst Takeaways
The results from Nvidia were better than expected and in-line with guidance for the fourth quarter, according to Hari.

"We would look to turn more constructive on the stock should a better entry point present itself and/or we begin to see fundamental outperformance -- beyond what we already model -- driven by factors that are idiosyncratic to NVIDIA," Hari said.

A bottoming on Nvidia's share price could be playing out with the company having its biggest data center GPU launch ever, Mosesmann said. The company's new gaming GPU had strong sales, along with the company ramping spending on accelerating GPUs going forward.

"The gaming inventory digestion period is ending, the China export control restrictions are in the numbers, which give us a clear view of 2023 and 2024," Mosesmann added.

Nvidia margins should return to normalized margin levels and actions taken on the gaming segment could help de-risk investor concerns, Fairbanks explained.

"While overall demand in China cloud remains soft, NVDA was able to roughly offset the impact of trade restrictions by offering other alternative products this quarter, and A800 will help to support customer demand going forward," Fairbanks said.

Gill raised the price target on Nvidia shares, citing the strong data center segment and improvements to the gaming segment.

"Data center revenue hit another record despite the well-known export control impact," Gill said. "Two major trends are carrying the segment: general purpose computing no longer scaling appropriately and breakthroughs in AI are driving broadening adoption."

On the gaming front, Gill said it was important for Nvidia to see channel inventory normalizing.

"In our view, this is a positive outlook, especially related to other parts of consumer that are expected to remain weak through C1H23."
Rakesh lowered the price target, noting how gaming revenue was down 23% quarter-over-quarter. Nvidia shipped below demand to correct inventory.

The analyst sees gaming could show growth in fiscal 2024 with new products.

"We continue to see NVDA dominate gaming and AI/accelerated compute, though near-term investor concerns remain with consumer and data center slowdown into 2023," he added.

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