NVIDIA Delivers Second Consecutive Spectacular Quarter

NVIDIA Corporation NVDA reported its October quarter results ahead of expectations and announced another “spectacular” guidance, MKM Partners’ Ian Ing said in a report. He added that the company achieved strong growth in gaming and data center revenues and that “significant legs remain to these current growth drivers.”

Analyst Ing maintains a Buy rating on NVIDIA, while raising the price target from $74 to $87.

NVIDIA reported its quarterly EPS $0.27 higher than the consensus estimate. Gaming and data center revenues both surged 59 percent on a sequential basis.

Spectacular Guidance

The company announced its revenue guidance for FQ4 at $2,100 million plus or minus 2 percent, versus the consensus forecast of $1,687 million. GAAP gross margins are guided to 59 percent, higher than the prior consensus at 57.6 percent.

NVIDIA provided several customer proof-points of GPUs being adopted in Hyperscale cloud services like and Amazon.com, Inc. AMZN's AWS, Microsoft Corporation MSFT's Azure, and Alibaba Group Holding Ltd BABA's AliCloud as well as in autonomous driving like the Tesla Motors Inc TSLA's win. They are also being used in the Baidu Inc (ADR) BIDU and TomTom developments.

Ing raised the EPS estimates for F4Q and FY18 by 65 percent and 47 percent, respectively, saying, “In lifting estimates, we consider the ongoing inflection to fundamentals led by gaming cloud computing.”

In Friday's pre-market session, NVIDIA was up 17.44 percent at $79.59.