Sumažiname šios puslaidininkių įmonės ir sumažiname savo tikslinę kainą

We are downgrading the shares of Nvidia (NVDA) to a Two rating from One, and dialing back our price target on the shares to $200 from $225.

These moves reflect the company’s downside pre-announcement for its July quarter in which it slashed its revenue expectation to $6.7 billion vs. the $8.1 billion consensus forecast and the $8.3 billion booked in its April quarter.

Even though the company’s data center business generated a record quarter, up 1% sequentially and ~61% vs. the year ago quarter, the deep drop in its gaming business, down 44% sequentially and 33% year over year, was the primary culprit for the revised outlook.

Žaidimų 

We expected the gaming center business to be weak given data points over the last few weeks from OEMs, suppliers, and third-party data, but the size of the sequential drop is greater than we and many others had expected.

In terms of Nvidia other markets, Automotive continued to grow during the July quarter, rising 59% quarter over quarter but we would caution members that end market is still very small potatoes, around 3%, for the company. Professional Visualization as well as OEM and Other segments also fell quarter over quarter, but similar to the Automotive business those are still relatively small segments, account for 9% of revenue on a combined basis. 

Based on the movement in NVDA shares however, down 5%-6%, the market is taking the news somewhat in stride following gaming and PC market comments in the last few weeks from Microsoft (MSFT), Intel (INTC), geriausias pirkimas (BBY) ir AMD (AMD) , and positive cloud/data center ones from Microsoft, AMD, and Alphabet (GOOGL).

With Nvidia poised to use its share buyback plan that was upsized to $15 billion in late May, one that expires in December 2023, the shares likely have limited downside from current levels. 

The uncertainty of the gaming market, which even after the July quarter fall, still accounts for ~30% of the Nvidia’s revenue stream and hefty chunk of its gross profit, have a high probability of keeping the shares rangebound at least until Nvidia reports its quarterly results on August 24.

As we digest the updated outlook, we’ll compare it against what Best Buy has to say about gaming demand and whether further inventory de-stocking measures are to be had when it reports its quarterly results on August 30.