NVIDIA Q2 F2018 earnings are scheduled for release after closing bell on Thursday, and Wall Street consensus currently stands at GAAP earnings of 70 cents per share on $1.96 billion in sales. The chip maker guided for $1.91 billion to $1.99 billion in revenue for its second fiscal quarter.
As has been the case all this year, most analysts are quite bullish on NVIDIA. One firm significantly raised its price target ahead of the report, while another raved on the company’s opportunities in cryptocurrency.
Big boost in target price ahead of NVIDIA Q2 F2018 earnings
In a note to investors earlier this week, Macquarie analyst Srini Pajjuri raised his price target for NVIDIA from $115 to $170 per share. That’s based on a much higher price/earnings ratio of 35 times on this F2020 estimate. His previous ratio on the stock was 26 times. He sees significant opportunities for the chip maker in the areas of artificial intelligence and machine learning. He also forecast a “solid beat and raise” for NVIDIA Q2 F2018 earnings.
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He credited strong demand for the Nintendo Switch, a “healthy PC gaming market” and “some help from cryptocurrency mining.” He also predicted double-digit sequential growth in data centers but a slowdown in automotive. Despite the overtly bullish tone of Pajjuri’s note, he maintains his Neutral rating because he sees no more room for upside.
He projects $1.95 billion in revenue and non-GAAP earnings of 80 cents per share for the July quarter and $2.1 billion in sales and 90 cents per share in non-GAAP earnings for the October quarter.
Gaming to drive NVIDIA Q2 F2018 earnings
Pajjuri isn’t the only analyst to focus on NVIDIA’s gaming segment and especially the Nintendo Switch. Jefferies analyst Mark Lipacis reiterated his Buy rating and $180 price target in a note to clients this morning.
He also sees cryptocurrency as a strong driver for the chip maker’s results, an area AMD has also benefited significantly from in the last quarter. Not everyone is so keen on cryptocurrency as a boon for future sales; Barclays is highly bearish on AMD and said cryptocurrency shouldn’t even be factored into estimates.
In fact, Lipacis named AMD’s and Intel’s second-quarter upside in average selling prices; he expects NVIDIA Q2 F2018 earnings to reveal “similar ASP benefits.” He expects the chip maker’s GAAP earnings to come out 2 cents ahead of consensus at 72 cents per share.
The day before NVIDIA Q2 F2018 earnings are set for release, the chip maker’s stock rose less than 1% to as high as $171.59. NVIDIA is the best-performing stock in the S&P 500, according to data from FactSet, after rising by almost 190% over the last 12 months. The S&P has only risen 13% over the same timeframe.