Nvidia's Unanswered Questions: 7 Analysts Break Down Tech Firm's Q2 Miss

Nvidia Corporation NVDA reported second-quarter revenues of $6.7 billion, short of the consensus estimate of $8.1 billion, and net income of $656 million, significantly the Street market expectations of $1.25 per share.

BMO Capital Markets

Analyst Ambrish Srivastava reiterated an Outperform rating, while reducing the price target from $250 to $230.

"The Gaming shoe that has dropped has turned out to be bigger," Srivastava wrote in a note, citing how the gaming segment could record another massive decline in revenues in the third quarter.

"Overall, we thought the guidance and commentary left more unanswered questions than not," the analyst added.

Morgan Stanley

Analyst Joseph Moore reaffirmed an Equal-Weight rating and a price target of $182.

"Weaker guidance should clearly frame the bottom for the gaming business after a 60% decline in quarterly revenues in just 2 quarters," Moore said. "But the data center deceleration — and ancillary issues around that business — give us pause given the elevated multiple."

Mizuho Securities

Analyst Vijay Rakesh reiterated a Buy rating, while lowering the price target from $250 to $225.

Nvidia’s results were in-line with its pre-announcement, but guidance was much below the consensus estimates, Rakesh said.

“We believe, however, NVDA could be set up for improving top line/GMs into C23E, with the decline in Gaming in the second and third quarters marking a bottom," he added. “We believe the pullback is an opportunity, reiterating Buy, with the Gaming reset a good entry point."

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Raymond James

Analyst Melissa Fairbanks reiterated a Strong Buy rating, while reducing the price target from $240 to $210.

“While the weakness in Gaming was widely expected following the preannouncement earlier this month, management provided incremental color on the Datacenter business, which we view as most important for the long-term thesis,” Fairbanks said.

“Net, we believe the report/guide should clear the decks for a return to growth exiting the year, with the long-term benefit of secular growth drivers in Datacenter and Auto more than offsetting any incremental risks to Gaming."

Rosenblatt Securities

Analyst Hans Mosesmann reaffirmed a Buy rating and a price target of $320.

“We believe Nvidia provided the kitchen sink on the Gaming side and the aggressive sell-in under shipment dynamic near term should provide the needed bottoming process investors were seeking,” Mosesmann wrote. “Ahead in 2023 and beyond look for data center Hopper to generate significant growth opportunities as transformers become mainstream and complemented with the coming inflection in automotive after years of investment."

Needham

Analyst Rajvindra Gill maintained a Buy rating and a price target of $185.

Nvidia’s gaming segment was impacted by the significant economic slowdowns in China and Europe, Gill explained.

“We are cautiously optimistic the US gaming and data center markets will continue to hold up the overall business," the analyst added.

KeyBanc Capital Markets

Analyst John Vinh maintained an Overweight rating and a price target of $230.

Nvidia continues to “undership gaming end demand to lean out the channel in anticipation of the RTX40 launch, while Pro Viz continues to weaken further,” Vinh wrote in a note. “We view guidance as a clearing event further derisking forward expectations."

NVDA Price Action: Shares of Nvidia had jumped by 3.03% to $177.44 at the time of publication Thursday.

Image: Nvidia Headquarters, Wikimedia Commons