NVIDIA Earnings Preview: Another Beat And Raise Expected

Updated on

NVIDIA Corporation (NASDAQ:NVDA) is slated to release its Q4 F2018 earnings report after closing bell tonight. Analysts are expecting NVIDIA earnings to come in at $1.16 per share on $2.67 billion in revenue. NVIDIA management guided for sales of $2.6 billion to $2.7 billion for Q4 F2018. In the year-ago quarter, NVIDIA earnings amounted to 99 cents per share on $2.17 billion in sales.

In a preview note on NVIDIA earnings, Deutsche Bank analyst Ross Seymore bumped his estimates slightly higher to reflect higher demand among cryptocurrency miners. He now expects the chip maker to report $2.8 billion in sales for its January quarter, while he previously had been roughly in line with the consensus. He also increased his estimate for growth in Gaming revenue from about $100 million to about $300 million, which brings his total estimate for Gaming sales to $1.69 billion or 60% of total revenues.

Seymore said although his revised estimate for Gaming raises his numbers above those guided by management for the Q4 NVIDIA earnings report, the chip maker has been beating the midpoint of its guidance by more than 10% regularly over the last 10 quarters.

He left his estimates for the rest of the chip maker’s segments the same. He’s expecting Datacenter revenues to make up 20% of total sales and rise 10% sequentially as NVIDIA’s Volta line continues to drive growth among server manufacturers and cloud service firms. He expects Proviz and Automotive sales to remain flat sequentially and OEM/ Other revenues to be down 9% quarter over quarter. He also left his gross margin estimate for Q4 F2018 the same at $59.7%

Looking ahead to the NVIDIA earnings release for Q1 F2019, he estimates sales at about $2.51 billion, an increase from the $2.46 billion he had been expecting previously. The Street pegs the chip maker’s sales at $2.46 billion for Q1. A seasonal decline in gaming is expected to drive the sequential decline in sales. He expects Gaming revenues to fall 20% sequentially, cryptocurrency mining sales to fall 25%, and Datacenter sales to rise 10% as the Volta line continues to ramp. He does expect fiscal 2019 to be the year crypto-related revenues moderate and estimates total sales for the years at $11.22 billion.

Seymore maintains his Hold rating on NVIDIA stock and generally expects another beat and raise as the company’s execution remains solid. He also maintained his $205 price target ahead of the NVIDIA earnings release because he feels the upside is already reflected in the company’s valuation. NVIDIA stock tumbled by more than 2% in morning trades, falling as low as $221.66.

Leave a Comment