Bull & Bear Takeaways From Nvidia's Q1 Beat

NVIDIA Corporation NVDA shares jumped 14 percent after the company delivered huge Q1 earnings and revenue beats. While there was certainly plenty to like from Nvidia’s report, Wall Street analysts remain polarized on one of the hottest stocks on the market in the past several years.

In a report, Canaccord Genuity analyst Matthew Ramsay lists both the bullish and bearish Q1 takeaways for Nvidia.

According to Ramsay, the surface-level Q1 numbers were certainly impressive.

“Overall, our positive thesis continues to play out with strong gaming GPU growth expected to continue in F’18 and beyond while acknowledging Y/Y growth compares will toughen in coming quarters, and we believe new trends including deep learning, virtual/augmented reality, and autonomous driving will catalyze new market growth longer-term,” Ramsay explains.

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In Nvidia’s conference call, company management touted datacenter strength bolstered by cloud service providers such as International Business Machines Corp. IBM, Amazon.com Inc. AMZN and Alphabet Inc GOOGL GOOG.

He listed the following bullish takeaways from Q1:

• Record Q1 revenue driven by strength in datacenter revenue and automotive revenue.
• Significant uptick in Drive PX engagements
• Growth businesses were strong across the board, including gaming.

However, Ramsay also pointed out two bearish takeaways as well:

• Despite 49 percent year-over-year growth, gaming revenue came in slightly below expectations.
• A 17 percent year-over-year uptick in operating expenses could weigh on earnings.

Ramsay will be looking closely for a more detailed breakdown of the quarter and any potential commentary on the Volta GPU during Nvidia’s investor day event on Wednesday.

Canaccord maintains a Buy rating on Nvidia and $125 price target for the stock.