Shares of NVIDIA Corporation (NASDAQ:NVDA) have surged 79% so far this year and 63% in the past three months, making the name the best tech investor bet of late. The visual computing company has seen its stock spike nearly 150% in the last 52 weeks, second only to Newmont Mining Corp (NYSE:NEM) among companies in the S&P 500. No other tech name has printed more than 50% gains in that stretch.
So Where Is Growth Coming From
After consolidating its lead over rival Advanced Micro Devices (NASDAQ:AMD), Nvidia has emerged as a dominant player in the high-end PC gaming market. The chipmaker’s unit market share during Q116 came in at nearly 80%, up from just 60% in early 2014. These market-share gains, combined with a surge in demand primarily for Nvidia’s high-end graphic chips used in gaming consoles, personal computers, datacenter and Tegra automotive platforms have helped the company generate growth despite slumping PC sales.
The Santa Clara, CA-based graphics chip firm posted better-than-expected fourth-quarter fiscal 2016 results on February 17, with revenue increasing 11.9% year-over-year [y/y] to $1.40 billion. Earnings came in at $0.52 per share, smashing estimates by $0.20.
Nvidia’s first-quarter 2017 results announced in May were just as good. Revenue increased 13.4% y/y to $1.30 billion, from $1.15 billion in the corresponding quarter of fiscal 2016. The company also beat analyst estimates for EPS by 14 cents, creating a 46% earnings boost.
Investors who have longed the stock ahead of Nvidia’s second-quarter earnings and revenue report on Thursday will be closely following the numbers after the closing bell.
NVIDIA Whisper Number
Analysts expect the company to report Q217 earnings per share of $0.37 and revenue of $1.35 billion. That would be $0.09 lower the $0.46 per share posted last quarter and $0.03 higher the $0.34 posted in the Q216. Revenue is projected to be $200 million higher than the $1.15 billion posted in the same period a year earlier. Meanwhile, EarningsWhisper.com reports a whisper number of $0.40 per share, 3 cents higher compared to the Street’s consensus.
Additionally, Roth Capital increased its 12-month base case estimate to $68 from $40 on the stock this morning, saying they expect another “strong” report, with growth once again being driven by Automotive and Datacenter. Further, the firm, which reiterates a ‘Buy’ NVDA rating, expects the company to see “strong growth” in Gaming in fiscal year 2017.
Now What
Should Nvidia beat expectations, it would mark the chipmaker’s fastest quarterly sales growth in six years.
Nvidia’s various deep learning initiatives, the idea of Tegra becoming integral to self-driving cars, and the fact that the company is executing extremely well in several massive markets, should make the case that fundamentally the stock is firmly on an uptrend trajectory.
Nvidia had a potent breakout of its monthly ascending channel since mid-May. The stock has been consolidating above its 200-day moving average since June 27 to digest this big move which shows commitment. Nvidia’s march back to yearly highs began in late July and has been a fairly steady climb since that time. Technically, a break and close above $60 could send it to $62.30. Strong earnings result could prompt the stock to print $65 and higher.
Shares of Nvidia are up 0.91% at $59.04 as of this writing.
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