NVIDIA Meets And Exceeds The Street's Great Expectations In Q3

NVIDIA Corporation NVDA reported its Q3 sales and EPS significantly ahead of expectations. Although NVIDIA’s revenue and margins are expanding, the stock currently trades at a premium to peers, and the risk/reward appears “balanced,” Oppenheimer’s Rick Schafer said in a report. He maintains a Perform rating on the company.

NVIDIA reported its Q3 sales at $2.0 billion, ahead of the Street’s $1.7 billion estimate. EPS came in at $0.94, significantly higher than the expectation of $0.56. Both gaming and datacenter generated 59 percent sequential growth.

The company projected its Q4 revenue at $2.1 billion at the midpoint, which was “equally impressive,” Schafer mentioned. This came against the Street's prior estimate of $1.7 billion.

Magnitude Impressive

Both the Q3 results and the Q4 guidance represent more than 50 percent year-over-year revenue growth and 200bps of gross margin expansion, Schafer noted. He added that the results were 18 percent ahead of expectations, while the guidance came in 23 percent higher.

“While expectations were high into the call after six consecutive beat/raise results, we believe investors will be pleased with the magnitude [...] We believe NVDA's revenue and margins are expanding as it transitions from a component supplier to a platform/solution provider, driving GPU adoption across its growth segments,” the analyst commented.

At last check, NVIDIA was seen up 24.43 percent at $84.32.