Ahead of last fall’s “Battlefield 1,” “Gears of War 4” and “Call of Duty: Infinite Warfare” releases, computer gamers upgraded to Nvidia’s Pascal-based GeForce GPUs and drove quarterly gaming revenue above $1.24 billion.
Loop Capital Markets expects this fall’s “Destiny 2,” “Call of Duty: WWII,” “Star Wars: Battlefront 2” and “Middle Earth: Shadow of War” to inspire a similar wave of upgrades to GeForce GTX series GPUs. The product’s 1080 Ti and 1070 segments are currently sold out online, justifying Loop estimates of $1.292 million in quarterly gaming revenue against last quarter’s $1.245 million.
“While we have been cautious on the adoption of cryptocurrencies like bitcoin, our checks point to mining demand for ether tokens remains intact,” analyst Betsy Van Hees wrote (see her track record here).
Last quarter, Nvidia brought in about $150 million from its OEM and IP client segment consisting largely of ether miners, and Van Hees predicts comparable third-quarter results.
At the same time, Nvidia’s production and shipment status for Volta GPUs drive Loop expectations for double-digit sequential growth in data center revenue.
The firm’s client list for Tesla V100 GPUs recently expanded to include Alibaba Group Holding Ltd (NYSE: BABA), Baidu Inc (ADR) (NASDAQ: BIDU), Tencent Holdings Ltd, Dell EMC, Hewlett Packard Enterprise Co (NYSE: HPE), International Business Machines Corp. (NYSE: IBM) and Super Micro Computer, Inc. (NASDAQ: SMCI); and Huawei, Inspur and Lenovo use its HGX server hardware.
The Bottom Line
Loop reiterated a Buy rating on the stock and raise its price target from $181 to $205. It also raised its quarterly estimates to $1.11 earnings per share and $2.39 billion revenue.
“We believe NVDA should trade well above the blended peer group average of 23x given its impressive growth opportunities across multiple end-markets,” Van Hees wrote.
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