Sales Predictions on the Rise
According to experts from Trefis, Nvidia is gearing up for a positive sales forecast as it heads towards the end of the third quarter in 2023. Overall sales of graphics processing units (GPUs) are expected to climb, but let’s not get too giddy—sales tied to cryptocurrency are still on the downward spiral, like a roller coaster without brakes.
What’s Driving Nvidia’s Revenues?
The upcoming Q3 results, set to be unveiled on November 15, are predicted to exhibit a robust growth exceeding 20% year-on-year. Analysts highlight that the electric surge in sales is largely a result of rising demand for Nvidia’s gaming GPUs, spurred on by the innovative Max-Q technology. Toss in the Datacenter’s eagerness for the Volta architecture, and you’ve got quite the revenue recipe!
Growth Across the Board
Trefis is not just focused on GPUs; they also foresee a grab of growth in Tegra Processors and GPU sectors soaring into the high teens percentage-wise. With projected revenues for Tegra hitting around $490 million in Q3, the automotive industry and Nintendo Switch’s system on a chip modules are driving the bus (or should I say, GPU?).
Challenges Looming Ahead
However, the clouds aren’t all fluffy. The report points out a troubling decline in crypto-related sales, making analysts nervous and perhaps a little cranky. The U.S. tariffs imposed earlier this year on certain Chinese goods are also casting shadows over Nvidia’s optimistic outlook.
Bottom Line: Earnings and Stock Prices
Trefis predicts Nvidia’s consolidated revenues for Q3 could be just shy of $3.10 billion, with around 84% from GPUs and the remainder from Tegra Processors. Trefis forecasts earnings per share at $1.63 for Q3, leading to a full year estimate of $7.09. Applying a trailing twelve months price-to-earnings multiple of 35 gives a price target of $248 for Nvidia’s stock, translating to a substantial premium above what it’s currently fetching on the market.
Yet, caution flags are waving as Nvidia recently faced a stock price dip of over five percent post-announcement of previous Q3 estimates. Its revenue suffered from the decline in crypto mining, coupled with the struggles of tech stocks in light of the tariff landscape. Nvidia has already disclosed that amidst all this, they anticipate scant blockchain-related sales for the remainder of 2023.
As the market watches closely, the tension continues to brew, leading analysts to speculate on Nvidia’s next move amidst both victory songs and cautionary tales in the GPU realm.
