Wednesday will see Nvidia (NVDA) step up to the earnings plate, when the chip giant will release its April quarter’s (F1Q) financials. Ahead of the anticipated print, Oppenheimer’s Rick Schafer has made a list of what to look out for.

Led by gaming, Schafer sees “broad upside vs. original $5.3B outlook,” and thinks results will be better than the Street’s forecast of $5.4 billion in sales and EPS of $3.28, while guidance for the July quarter should also improve on the $5.5 billion/$3.28, revenue and EPS estimates, respectively.

“Supply tightness,” however, will put a cap on the upside, and Schaffer also believes that until the end of the year, “constraints likely persist, though gradual supply improvement supports continued Q/Q growth.”

Looking at the company’s main revenue sources, Schafer expects the Gaming division to grow by more than 100% year-over-year, compared to the 67% year-over-year uptick in F4Q, “led by robust GeForce RTX demand, which continues to outstrip supply.”

Although the company has aggressively pushed to boost supply, channel inventories “remain lean,” and the analyst notes that Nvidia remains the leader in high-performance PC gaming where “content/performance/console are driving outsized demand.”

Additionally, the crypto boom and its impact on GPU sales alone will drive an extra $100 million of upside – sales are expected to come in now at $150 million vs. $50 million originally.

The other main breadwinner, Data Center, is expected to build on the A100’s momentum, and with the addition of Mellanox should increase by 85% year-over-year.

“We see hyperscaler spending accelerating into 2Q/2H and up 15% for CY21,” the 5-star analyst said. “NVDA share gains, particularly in AI inference, lead above-market growth.”

Elsewhere, while Nvidia’s Automotive segment showed a 1% drop in F4Q, Schafer estimates 6% growth in the quarter. The analyst has high hopes for the segment and calls it the “next major growth pillar.”

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Inflection is anticipated by 2023/2024, and by 2027, the company expects the segment to generate revenue of $8 billion. The analyst also believes last year’s revenue sharing subscription deal with Mercedes will lead to similar deals with other auto OEMs.

All in all, Schaffer rates NVDA an Outperform (i.e. Buy) along with a $700 price target. The implication for investors? Upside of 12%. (To watch Schafer’s track record, click here)

It’s safe to say Nvidia remains a Wall Street favorite. Based on 22 Buys vs. 2 Holds, the stock boasts a Strong Buy consensus rating. Given the average price target stands at $685.43, the shares are anticipated to appreciate ~10% over the coming months. (See NVDA stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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