14% Upside Seen For Nvidia Shares On PC Gaming, Bitcoin Mining Strength

NVIDIA Corporation NVDA could see a boost from a highly-hyped slate of new video games.

Ahead of last fall’s “Battlefield 1,” “Gears of War 4” and “Call of Duty: Infinite Warfare” releases, computer gamers upgraded to Nvidia’s Pascal-based GeForce GPUs and drove quarterly gaming revenue above $1.24 billion.

Loop Capital Markets expects this fall’s “Destiny 2,” “Call of Duty: WWII,” “Star Wars: Battlefront 2” and “Middle Earth: Shadow of War” to inspire a similar wave of upgrades to GeForce GTX series GPUs. The product’s 1080 Ti and 1070 segments are currently sold out online, justifying Loop estimates of $1.292 million in quarterly gaming revenue against last quarter’s $1.245 million.

Ethereum

Although management guided for a sequential drop in cryptocurrency revenue, Loop anticipates steady performance driven by Ethereum blockchain activity.

“While we have been cautious on the adoption of cryptocurrencies like bitcoin, our checks point to mining demand for ether tokens remains intact,” analyst Betsy Van Hees wrote (see her track record here).

Last quarter, Nvidia brought in about $150 million from its OEM and IP client segment consisting largely of ether miners, and Van Hees predicts comparable third-quarter results.

Data Centers

At the same time, Nvidia’s production and shipment status for Volta GPUs drive Loop expectations for double-digit sequential growth in data center revenue.

The firm’s client list for Tesla V100 GPUs recently expanded to include Alibaba Group Holding Ltd BABA, Baidu Inc (ADR) BIDU, Tencent Holdings Ltd, Dell EMC, Hewlett Packard Enterprise Co HPE, International Business Machines Corp. IBM and Super Micro Computer, Inc. SMCI; and Huawei, Inspur and Lenovo use its HGX server hardware.

The Bottom Line

Loop reiterated a Buy rating on the stock and raise its price target from $181 to $205. It also raised its quarterly estimates to $1.11 earnings per share and $2.39 billion revenue.

“We believe NVDA should trade well above the blended peer group average of 23x given its impressive growth opportunities across multiple end-markets,” Van Hees wrote.

Related Links:

Expect Nvidia, AMD To Ride Cryptocurrency Wave Into 2018

Looking Beyond The Shiny Surface Of Nvidia’s Big Q2 Beat