© Reuters NVIDIA shares up 3% on revenue beat, guidance misses expectations
(Original posted at 4:46pm ET November 16th)
By Davit Kirakosyan and Senad Karaahmetovic
NVIDIA (NASDAQ:) shares are up 3% in pre-market Thursday following the company’s reported Q3 results, with revenue of $5.93 billion (down 17% year-over-year) coming in better than the consensus estimate of $5.8B. EPS was $0.58, compared to the consensus estimate of $0.71.
Q3 Data Center revenue was up 31% year-over-year to $3.83B. Gaming revenue grew 51% year-over-year to $1.57B.
“We are quickly adapting to the macro environment, correcting inventory levels and paving the way for new products,” said Jensen Huang, founder and CEO of NVIDIA.
The company expects Q4/23 revenue of $6B, below the consensus estimate of $6.09B. GAAP and non-GAAP gross margins are expected to be 63.2% and 66.0%, respectively, plus or minus 50 basis points.
Following the results, Summit Insights’ analyst upgraded NVIDIA from Hold to Buy, saying they see tailwinds as we move through 2023, driven primarily by its new product cycle. Further, they believe downside from the crypto-mining demand and the export restriction of data center products to Chinese customers are now behind the company.
JPMorgan’s analyst reiterated an Overweight rating on Nvidia stock and a $220 per share price target as he sees the bottom in sight for gaming inventories.
“While the business is impacted by multiple near term headwinds, we believe those are beginning to abate and should set Nvidia well for growth acceleration in CY23,” the analyst said in a client note.
Similarly, Morgan Stanley’s analyst believes the numbers are bottoming. Gaming is now de-risked while the analyst expects data center growth to resume from here.
“Our contacts both within the company and at customers suggest a high degree of confidence that Hopper starts to drive growth, as we see more substantial volume in the April quarter; despite overall headwinds in cloud we expect stronger sequential growth beyond this quarter,” the analyst wrote in a note.
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