Analyst Says Nvidia's Second-Half Outlook Is Promising

NVIDIA Corporation NVDA stock has gained another 24.7 percent so far in 2018, but one analyst’s recent mid-quarter channel checks revealed Nvidia is showing no signs of slowing down.

The Analyst

Raymond James analyst Chris Caso reiterated his Outperform rating and $300 price target for the stock.

The Thesis

Raymond James’ gaming and data center targets for Nividia in the second half of the year are looking to be in-line with the latest channel check numbers.

While bears have focused on a decline in demand from cryptocurrency miners, Caso said Nvidia will likely see an uptick in gaming demand in coming months thanks to a new product cycle.

“While retail GPU prices have been dropping, we believe that’s by design, as NVIDIA wishes to normalize the market before an eventual new gaming product cycle,” Caso said in a Wednesday note.

Caso said Nvidia will likely make an announcement about its new consumer GPU some time in October. Raymond James is calling for October-quarter sequential gaming revenue growth of 10 percent, but Caso said that estimate is much more likely to be too conservative than too optimistic.

At the same time Nvidia is well-positioned for an uptick in the gaming business, Caso said Nvidia appears on track to deliver between 40 percent and 60 percent data center revenue growth.

Even after the stock’s incredible run in recent years, Caso said long-term growth markets such as artificial intelligence give Nvidia investors plenty of reason for optimism.

Price Action

Nvidia stock traded lower by less than 1 percent to $240.78 on Wednesday.

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