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Bull of the Day: NVIDIA (NVDA)

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I last wrote about NVIDIA (NVDA - Free Report) as the Bull of the Day in late November after their strong Q3 FY2020 report. Today, I want to cover the company and stock action since their last quarterly report and then address the outlook since the market crash.
 
On February 13, NVDA delivered another beat-and-raise quarter for their Q4 ended in January. Here's what I told my TAZR Trader subscribers where we were happy to have bought the dip the week before under $245...
 
NVIDIA Data Center Sales Surge
 
Q4 EPS of $1.89 beats $1.66 Estimate by 14%
 
Q4 Sales of $3.105 billion beats $2.96B by 4.7%
 
Q1 outlook sees revenue of $3B (consensus $2.86B), plus or minus 2%, and operating expenses of about $835M.
 
Q4 adjusted gross margin was 65.4%, above the 64.5% consensus.
 
Revenue by market platform...
 
Gaming: $1.5B (+56% Y/Y, consensus $1.52B)
 
Data Center: $968M (+43%, consensus $825.2M)
 
Professional Visualization: $331M (+13%, consensus $328.1M)
 
Auto: $163M (a miss vs consensus $168.7M)
 
OEM and Other: $152M (+31%, consensus $129.2M)
 
Management's Q1 revenue guide tops Wall Street consensus even as it projected a $100 million hit from the coronavirus outbreak.
 
NVIDIA did not name big customers but said that "hyperscale" customers drove the increased data center sales, a group that industry analysts often define as major cloud computing vendors such as Google, AWS and Azure among others.
 
NVDA shares notched a new all-time high in after-hours above $292 and drifted back near $285. Let's see if she marches on $300 Friday!
 
(end of TAZR notes from 2/13)
 
The next day, analysts were out en masse raising their outlooks and price targets. NVDA was up +7% on MONSTER VOLUME of 26 million shares, more than 3X the 90-day avg! And NVDA shares soared from $270 up to $315 over the next three days. Here were some of those views...
 
NVDA PTs move to Street consensus range of $315-325
 
I share these analyst notes not so much for the PT as the core thesis of their upgrade. We'll get into specifics next week, especially from long-time bull William Stein at SunTrust who was the Street-high target at $314 for sometime before the Jefferies analyst notched him by a buck earlier in the week.
 
PT raised to $350 from $301 at RBC Capital
 
Analyst Mitch Steves raised his price target on Nvidia to $350 and kept his Outperform rating after its reported "record" data center revenue and record gross margins in Q4. The analyst expects the stock to continue to work higher given the improvement in its mix of business as well as the quality of its earnings and margins, with further upside potential anticipated in 2020.
 
PT raised to $350 from $300 at Oppenheimer
 
Analyst Rick Schafer raised his price target for Nvidia to $350 from $300 and reiterated an Outperform rating after the company bested expectations on "impressive" upside results and outlook. Schafer tells investors in a research note that he continues to like the 2020 upside setup, led by expanding opportunities in AI inferencing, and says Nvidia remains his top large-cap structural growth/margin story.
 
PT raised to $330 from $310 at Susquehanna
 
Analyst Christopher Rolland, in a note to investors titled "Who Could Ask for Anything More," said that Nvidia reported "an outstanding quarter" driven mainly by its data center segment. In addition, the segment is expected to grow in Q1 off a "highly elevated base," noted Rolland, who raised his price target on Nvidia shares to $330 and keeps a Positive rating on the stock.
 
PT raised to $330 from $315 at Jefferies
 
Analyst Mark Lipacis noted that Nvidia's Q4 earnings and Q1 outlook beat consensus and that the company forecast its Data Center revenues to increase by 66% year-over-year to exceed $1B in the April quarter. The analyst, who argues that Nvidia "has emerged as the AI de facto standard," expects the stock to continue to command a premium P/E multiple and maintains a Buy rating with an increased $330 price target following the company's results and guidance. Notably, Lipacis went to the Street high PT of $315 just three days before earnings.
 
PT raised to $330 from $275 at Piper Sandler
 
Analyst Harsh Kumar raised his price target for Nvidia to $330 from $275 saying the company last night reported a "blockbuster" quarter, as both January quarter results and April quarter guidance were well above Street expectations. The analyst is pleased with the execution of the company and encouraged by the pick-up in the data center business at both hyperscalers and enterprises. 
 
PT raised to $325 from $314 at SunTrust
 
Analyst William Stein raised his price target on Nvidia to $325 and kept his Buy rating, saying the company's data center group beat in Q4 aligns with his bullish thesis even though the risk of second-half supply constraints has emerged. The analyst recommends that investors buy the stock based on its superior positioning in gaming, server acceleration / AI, autonomous driving potential.
 
PT raised to $325 from $240 at Cowen
 
Analyst Matthew Ramsay raised his price target on Nvidia to $325 from $240 following its significant beat and raise results. He believes the results and guidance are driven by a cloud CapEx recovery and the driving force of real-time conversational AI with the scaled ramp of Ampers still to come. 
 
PT raised to $320 from $290 at Wells Fargo
 
Analyst Aaron Rakers raised his price target for Nvidia to $320 from $290 following the company's quarterly results, saying stronger than expected Data Center revenue more than offset slightly weaker gaming revenue. The analyst maintains an Overweight rating and says he expects Nvidia to reiterate positive visibility into strong Data Center growth through FY21 driven by Conversational AI deploys with ongoing positive incremental traction in AI Inferencing.
 
PT raised to $315 from $245 at Citi
 
Analyst Atif Malik raised his price target for Nvidia to $315 from $245 saying the company last night reported a "solid" 33% quarter-over-quarter growth in data centers. The analyst expects stock to outperform the group in 2020 on improving data center demand, closure of Mellanox (MLNX) acquisition, and a next gen 7nm Ampere platform announcement. 
 
Among more conservative views, here were three...
 
PT raised to $285 from $250 at BMO Capital 
 
Analyst Ambrish Srivastava raised his price target on Nvidia to $285 after its "really big beat" in Data Center Group revenue and margins as well as its "solid" guidance with "minimal impact" observed from China's coronavirus. The analyst still keeps his Market Perform rating on the stock, saying Nvidia is "reasonably valued" at current levels.
 
PT raised to $304 from $259 at Morgan Stanley
 
Analyst Joseph Moore raised his price target on Nvidia shares to $304 from $259 after the company's report that the data center business has surged, as he had hoped. The strong data center growth is particularly notable given he sees new products coming in the next quarter or two and the company guided to continued double digit sequential growth in data center in April, said Moore, who added that the gaming segment also returned to solid growth. 
 
PT raised to $300 from $240 at Raymond James
 
Analyst Chris Caso raised his price target for Nvidia to $300 from $240 and reiterated an Outperform rating following the January quarter results, saying it is "striking" that Nvidia posted exceptionally strong datacenter growth before its expected new product launch, owing to the newfound traction in AI inferencing. The analyst adds that most of the impact of the 7nm product cycle is still to come, which he expects to be a catalyst for estimates.
 
PT raised to $295 from $270 at Mizuho 
 
Analyst Vijay Rakesh raised his price target for Nvidia to $295 from $270 and reiterates a Buy rating on the shares following last night's results. Continued strong gaming and artificial intelligence in data center position Nvidia well for 2020.
 
What Do I Think of NVDA Since the Crash?
 
I still love the company and the stock, especially under $220.
 
Based on optimism about NVIDIA's core markets, FY21 estimates are now eyeing record revenues of $13.25 billion, up from $12.86B a month ago, representing 21.6% growth. 
 
And next year's sales are still modeled for 15.5% growth to $15.3 billion.
 
At the current market cap of approximately $135 billion, that makes NVDA trade under 10X forward sales.
 
For EPS, in the last 30 days, the consensus has climbed from $7.10 to $7.80, for a projected 34.7% advance.
 
The king of AI has indeed returned to strong growth. And while the stock price raced ahead for all those chasing who missed their chance near $150 last year, intelligent investors just got a better entry this month.
 
Global economic worry and market volatility are by no means over and done, but NVDA pullbacks to $200-210 will be bought aggressively by technology investors looking at the long-term success of this dominator.
 
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