Nvidia (NVDA +8.8%) is "migrating from [being] a consumer-orientated company towards one that focuses on stickier and more profitable markets, such as autos, enterprise/datacenter, and HPC," says Needham's Rajvindra Gill, upgrading shares to Buy following the GPU giant's FQ2 report.
Stifel's Kevin Cassidy offers a similar thesis, and also predicts PC GPU sales will get a lift from major 2H game launches.
Morgan Stanley, Deutsche, and others note Nvidia's solid FQ3 guidance comes even though AMD reported a Q2 decline in GPU shipments to graphics card channels, and offered light Q3 guidance - Nvidia sold off in response.
Of note: AMD blamed the Q2 decline on weaker demand from cryptocurrency miners, a niche it has had more exposure to than Nvidia.
Nonetheless, MS and Deutsche remain cautious due to valuation. After backing out net cash, Nvidia currently goes for 14.6x FY15E (ends Jan. '15) EPS and 13.2x FY16E EPS.