The NVIDIA FQ3 2018 earnings results were released after closing bell on Thursday night. The chip maker reported earnings of $1.33 per share on $2.64 billion in sales, compared to the consensus of 94 cents per share and $2.36 billion in revenue. The NVIDIA FQ3 2018 earnings results were released after closing bell on Thursday night. The chip maker reported earnings of $1.33 per share. In the year-ago quarter, NVIDIA Corporation (NASDAQ:NVDA) reported 94 cents per share in earnings on $2 billion in sales.

Nvidia fq3 2018 earnings
Mizter_x94 / Pixabay

Because of how much NVIDIA stock has gained this year, many analysts are on the sidelines simply because of valuation. However, the NVIDIA FQ3 2018 earnings results caused some perma-bulls to raise their target prices for the company’s stock.

Still on the sidelines on NVIDIA stock

Macquarie analyst Srini Pajjuri and Corey Grady raised their price target for the stock from $155 to $200 following the NVIDIA FQ3 2018 earnings release, although like many other analysts, they kept their Neutral rating due to valuation. They said Data Center reacceleration, the Nintendo Switch and seasonal strength in Gaming PCs drove the October quarter’s strong results.

They expect NVIDIA’s Volta products will continue to be a tailwind going into next year and see “limited competitive risk” in the area of gaming PCs. They also expect strength in the Nintendo Switch to continue through the first half of next year.

NVIDIA’s gross margin came in at 59.5% on the back of a favorable product mix in Data Centers. Data Center revenue grew 20% sequentially to $501 million, while Tegra revenue rose 26% on the back of Nintendo Switch builds. The chip maker’s management said that cryptocurrency mining-related revenue declined, but the Macquarie team believes some miners are using mainstream gaming cards, which could mean that the company’s Gaming segment will slow in the coming quarters due to waning interest in cryptocurrency mining. Auto revenue was flat sequentially at $144 million.

NVIDIA FQ3 2018 earnings results boost price targets

Jefferies analyst Mark Lipacis reiterated his Buy rating on NVIDIA stock and boosted his price target from $230 to $240 per share. The chip maker beat expectations for its Gaming, Data Center, and Crypto-specific GPUs for cryptocurrency mining. The ramp of NVIDIA’s new Volta Data Center GPU drove the segment’s sales up 109% year over year to $51 million. Data Center sales annualize at $2 billion, Lipacis noted, which is 11% of Intel’s Data Center Group.

He also expects Gaming to continue driving upside for NVIDIA and projects sustained growth next year driven by the new Volta-based consumer processors.

A few other analysts also raised their price target for the chip maker’s stock following the NVIDIA FQ3 2018 earnings release. Raymond James analysts raised their target from $180 to $250, while Stifel analysts increased their target from $110 to $184.

A beat and raise quarter for NVIDIA

The chip maker’s outlook was also solid as management guided for fourth-quarter sales of about $2.65 billion, compared to the $2.51 billion KeyBanc analyst Michael McConnell and James Wang were estimating. NVIDIA management expects seasonal sales declines for the Nintendo Switch and cryptocurrency mining, although they expect Data Center sales growth to offset those declines. The chip maker expects a gross margin of 59.7%, versus KeyBanc’s estimate of 58.4%. The firm remains on the sidelines on NVIDIA stock due to valuation and pegs fair value at $200 per share.

The day after the NVIDIA FQ 2018 earnings release, the chip maker’s stock surged by as much as 5.7% during regular trading hours, rising to as high as $217.27, another record high.