Nvidia: Best In Class Among Semiconductors In 2016
Alex Cho • 16 Comments
Alex Cho • 16 Comments
Nvidia Is A $12 Stock Worth $18: A Sum Of The Parts Analysis
Adam Levine-Weinberg • 65 Comments
Adam Levine-Weinberg • 65 Comments
Oct. 31, 2014, 11:31 AM
- Three weeks after providing a calendar Q3 warning that triggered a massive chip stock rout, Microchip (MCHP +7.3%) has provided Q4 guidance that's in-line with lowered estimates. The microcontroller vendor, which has often seen trends emerge ahead of peers, also said it saw most of its inventory correction in Q3, and expects Q4 sales to be just "slightly below typical seasonal levels."
- Chip stocks are up strongly (SOXX +4%) on a day the Nasdaq is up 1.4%. Since Microchip's warning, a slew of analog chipmakers and microcontroller firms (e.g. Atmel, Freescale, STMicro, Intersil, Linear) have offered light Q4 guidance, and other firms have reported seeing high-end Android weakness (e.g. Synaptics, Cirrus Logic, Amkor).
- On the other hand, several mobile chipmakers (Skyworks, RF Micro, TriQuint, Silicon Motion), some of which have decent iPhone exposure, have provided strong results and/or guidance. Other chipmakers, such as Broadcom, Texas Instruments, and Xilinx, have rallied after delivering in-line guidance.
- Susquehanna's Chris Caso: "By now, we think it’s clear that the weakness MCHP saw in September is not company specific ... The question now is if the full extent of the weakness has been dialed into estimates. If it has, then this would be among the shortest and mildest downturns in many years."
- Notable gainers: SNDK +3.9%. MU +4.1%. AMAT +3.9%. TXN +4.7%. NXPI +3.9%. NVDA +3.5%. MXIM +4.7%. LLTC +5.1%. FCS +9.6%. FSL +8.8%. ADI +6.5%. TQNT +6.8%. RFMD +6.5%. ATML +5.9%. AVGO +5.1%. MRVL +4.7%. AMCC +8.9%. BRCM +3.6%. TSM +4.4%. ARMH +3.3%.
- Intel (INTC +3.5%) has recovered most of the losses it saw yesterday due to Intesil's (ISIL +3.3%) results and guidance, and related comments about a PC chip inventory correction.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Aug. 26, 2014, 12:00 PM
- Stifel has launched coverage on Cray (CRAY +6.5%) with a Buy and $33 target. Shares have jumped in response.
- Separately, Cray has launched the CS-Storm, an HPC/analytics accelerator system that supports up to 8 Nvidia (NVDA +0.8%) Tesla GPUs to go with 2 Intel Xeon CPUs. Cray claims the CS-Storm can deliver over 11 teraflops of performance per node, with 22 of them fitting on a standard 48U server rack.
- The Tesla line has turned into a major growth driver for Nvidia, as adoption rates for GPU-based co-processors within HPC systems keep rising. Nvidia declared on its FQ2 CC (transcript) Tesla GPUs "now power the world's 15 most energy-efficient supercomputers as listed in the Green500 list." A solution pairing Tesla with ARM server CPUs was recently shown off.
Aug. 8, 2014, 7:07 PM
- 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.
- Prior Nvidia earnings coverage
Aug. 7, 2014, 4:46 PM
- Nvidia (NASDAQ:NVDA) expects FQ3 revenue of $1.2B (+/- 2%), above a $1.16B consensus. Stabilizing PC sales appear to be providing a lift.
- FQ2 gross margin was 56.4%, +130 bps Q/Q and +10 bps Y/Y, and above guidance of 54%. FQ3 GM is expected to amount to 55.5% (+/- 50 bps).
- GPU sales -2% Q/Q and +2% Y/Y to $878M; they rose 14% in FQ1. GPU sales for gaming PCs (a high-margin business) rose 10% Y/Y, boosted by a recent refresh. Tesla (HPC), Grid (cloud), and Quadro (workstation) GPU sales are also healthy.
- Tegra sales, which fell hard during much of 2013, rose 14% Q/Q and 200% Y/Y to $159M (boosted by the Tegra K1). Automotive Tegra sales were up 74% Y/Y.
- Opex +2% Y/Y to $411M. $500M worth of shares were received through Nvidia's structured buyback agreement.
- FQ2 results, PR, CFO comments (.pdf)
Aug. 7, 2014, 4:24 PM
- Nvidia (NASDAQ:NVDA): Q2 GAAP EPS of $0.22 beats by $0.02.
- Non-GAAP EPS of $0.30.
- Revenue of $1.1B (+12.6% Y/Y) in-line.
- Shares +4.3%.
Jul. 18, 2014, 12:31 PM
- In addition to offering soft Q3 guidance, AMD (AMD -17.5%) stated on its CC (transcript) its expects Q3 to be this year's "peak quarter" for console APU shipments.
- FBR, which has cut shares to Market Perform, calls this "most surprising," given console APU shipments rose sharply in Q4 last year (as the Xbox One/PS4 launched).
- It thinks AMD might benefit down the line from a design win for Nintendo's next-gen 3DS, but only sees this boosting EPS by $0.04. The firm is also concerned inventory rose 10% Q/Q to a new all-time high.
- When pressed in the Q&A about what his console remarks imply for Q4 sales, CEO Rory Read declined to offer a forecast. He did, however, state PC-related sales are expected to rise in Q4 (in-line with normal seasonality).
- BofA/Merrill, which has cut shares to Underperform, argues AMD's PC CPU/GPU ops (have seen share losses to Intel/Nvidia) remain "a material headwind." The firms adds light exposure to enterprise PCs (outperforming in 2014) and certain low-end PC segments seeing strong growth (such as Chromebooks) are also issues.
- Raymond James is still bullish: Though thinking management should've communicated console trends better, it believes AMD continues to execute well, and suspects there's an "element of prudence" to Microsoft/Sony's build activity.
- Nvidia (NVDA -3.9%) is off in sympathy. Read stated on the CC AMD saw a decline in high-end GPU shipments to graphics card channels - Digitimes previously reported something similar - as demand from cryptocurrency miners abated." Shipments are expected to rise in Q3.
Jun. 23, 2014, 9:58 AM
- Pac Crest has downgraded GPU archrivals AMD (AMD -3%) and Nvidia (NVDA -2%) to Underperform. The firm cites checks that point to weak motherboard production and a major Q/Q drop in high-end graphics card shipments.
- Digitimes recently reported global graphics card shipments (not the same as end-user demand) were set to fall 30%-40% Q/Q in Q2 due to high inventories, and that AMD/Nvidia were responding by cutting shipments rather than prices.
- Separately, AMD has unveiled the FirePro W8100, a workstation card that support 8GB of GDDR5 RAM and 2.1 teraflops of double precision compute performance. A flagship card (the FirePro W9100) supporting 2.62 teraflops of double precision compute performance was launched in April.
- The W8100 launch comes shortly after AMD said it would direct more resources towards FirePro going forward. Nvidia's Quadro GPU line currently towers over the workstation market.
- BofA/Merrill downgraded Nvidia last week.
Jun. 12, 2014, 4:26 PM
- Citing stronger-than-expected business PC demand, Intel (INTC) now expects Q2 revenue of $13.4B-$14B, better than prior guidance of $12.5B-$13.5B and a $13B consensus.
- Moreover, the chip giant now expects "some revenue growth" for the whole of 2014, after previously guiding for flat sales; the consensus is for 0.7% growth.
- Full-year R&D/MG&A spending guidance has been upped by $300M to $19B-$19.4B.
- The guidance hike follows several quarters of narrowing PC shipment declines, thanks in large part to healthy corporate demand. Windows 7 system purchases tied to Microsoft's decision to end Windows XP support have played a key role.
- Other PC industry names are up in sympathy: MSFT +1% AH. AMD +1.4%. HPQ +0.8%. NVDA +0.7%.
May 19, 2014, 10:26 AM
- In a bullish call on chip stocks, RBC's Doug Freedman has upgraded Nvidia (NVDA +2.9%), Broadcom (BRCM +1.8%), Micron (MU +3.3%), Texas Instruments (TXN +1.3%), and Altera (ALTR +1.8%) to Outperform.
- Freedman sees the industry's free cash flow profile improving as it transitions "into a more mature era," and companies embrace more "shareholder-friendly capital-allocation strategies."
- Nvidia, TI, and Altera have already announced major cash-return efforts in recent years. TI has promised to return all of its FCF to shareholders, save for funds needed to pay down debt.
- Micron (just digested Elpida) and Broadcom have been more cautious, though the latter did hike its dividend in January.
- Freedman downgraded Micron on Jan. 3, when shares were at $21.66. He was bullish during the company's big 2012/2013 rally.
- Chip ETFs: SOXX, SMH, XSD, PSI, SOXL, USD, SOXS, SSG
May 8, 2014, 5:21 PM
- Nvidia (NVDA) expects FQ2 revenue of $1.1B (+/- 2%), favorable to a $1.08B consensus. But gross margin is expected to slip to 54% from FQ1's 55.1%.
- In its CFO commentary (.pdf), Nvidia states GPU sales (81% of revenue) rose 14% Y/Y, even with FQ4's growth rate. Strong high-end PC GPU (GeForce GTX) and GRID (server GPU) sales provided a boost, as did continued Tesla (HPC CPU) growth.
- Tegra sales, which plunged 37% Y/Y in FQ4 thanks to share loss to Qualcomm and others, rose 6% Q/Q and 35% Y/Y to $139M on the back of higher smartphone and automotive volumes.
- Opex only rose 4% Y/Y, a marked slowdown from FQ4's 13% clip and giving a boost to EPS. A $500M share repurchase agreement was struck during the quarter; Nvidia added $1B to its buyback program last November.
- Nvidia released its core FQ1 numbers on Tuesday after accidentally e-mailing a draft.
- Nvidia's full earnings release
May 6, 2014, 9:28 AM
- Though Nvidia (NVDA) originally planned to release its FQ1 results on Wednesday, the company was forced to release its core numbers early after a preliminary draft was accidentally e-mailed to ~100 people.
- FQ1 gross margin was 55.1%, +130 bps Q/Q and +50 bps Y/Y, and above guidance of 54.5%. That provided a boost to EPS, as did the fact opex only rose 4% Y/Y, less than FQ4's 13% and below revenue growth of 16% (up soundly from FQ4's 3% growth).
- Nvidia's guidance and full FQ1 results will be delivered on Wednesday, as originally planned.
- FQ1 results, PR
Apr. 1, 2014, 9:40 AM
- Nvidia (NVDA +3.4%) has been upgraded to Outperform by JMP. The company made a flurry of product announcements last week.
- InvenSense (INVN -2.2%) has been cut to Market Perform by Oppenheimer. A Galaxy S5 teardown recently turned up a 6-axis InvenSense motion sensor.
- Rubicon (RBCN +10%) has been upgraded to Overweight by JPMorgan.
- JA Solar (JASO +5.2%) has been started at Outperform by Northland.
- Tablueau (DATA +1.4%) has been upgraded to Outperform by Baird.
- Informatica (INFA +4.2%) has been upgraded to Overweight by Barclays.
- MagnaChip (MX -2.5%) has been cut to Neutral by Chardan Capital following Friday's restatement/CFO news. UBS downgraded shares to Sell yesterday.
- Extreme Networks (EXTR +6%) has been started at Buy by Wunderlich. The company recently launched several new software products, as well as 100-gig Ethernet blade for its switches.
- Coupons.com (COUP -2.2%) has received a bullish rating from BofA/Merrill, and neutral ones from Goldman and RBC, on underwriter coverage day.
Mar. 19, 2014, 1:07 PM
- Stifel's Kevin Cassidy has hiked his Nvidia (NVDA +2.4%) PT to $21 from $19. He sees the chipmaker using its March 25 analyst day to discuss "many new product initiatives" that can deliver upside to estimates.
- Citing the potential for margin expansion and upside to professional GPU and automotive performance, Cassidy is raising his FY16 (ends Jan. '16) EPS forecast to $1.30. That's well above a $0.93 consensus.
- Strong demand for professional parts (i.e.Quadro workstation GPUs and Tesla HPC GPUs) helped Nvidia's GPU sales rise 14% Y/Y in the January quarter.
Feb. 12, 2014, 5:12 PM
- Nvidia (NVDA) expects FQ1 revenue of $1.05B (+/- 2%), above a $1B consensus.
- The chipmaker soundly beat FQ4 estimates thanks to a 14% Y/Y increase in GPU sales to $947M. That growth rate represents a reversal from FQ3's 2% drop. Nvidia cites strong sales of its high-end GeForce GTX desktop GPUs, Quadro workstation GPUs, and Tesla HPC GPUs. Notebook GPU sales fell slightly due to PC weakness.
- Tegra sales remained under pressure, plunging 37% to $131M. Nvidia is counting on the Tegra 4i (integrated baseband/app processor) and K1 (high-end app processor) to spark a turnaround.
- Gross margin was 54.1%, -130 bps Q/Q but +120 bps Y/Y. Nvidia expects a GM of 52.5% in seasonally weak FQ1. Opex rose 13% Y/Y, easily eclipsing revenue grow of 3%.
- Only $37M was spent on buybacks. Nvidia added $1B to its buyback authorization back in November.
- FQ4 results, PR, CFO commentary
Jan. 14, 2014, 5:42 PM
- PC industry names outperformed amid a broader tech rally, aided by a JPMorgan Intel (INTC +4%) note that argued PC demand is stabilizing, and tablet cannibalization diminishing. A number of chip stocks also rallied strongly (SOXX +2.1%).
- Also: Major hard drive suspension assembly maker Hutchinson has reported above-consensus Dec. quarter sales, while citing strong demand for 2.5" notebook drive assemblies. Seagate and Western Digital both rallied.
- JPMorgan's Christopher Danely, who upgraded Intel to Overweight, has raised his 2014 estimates soundly above consensus ahead of the chip giant's Thursday Q4 report. Danely notes Intel, Microsoft, H-P, and others have said PC demand is improving, and that Taiwan's big-4 notebook contract manufacturers collectively grew their shipments 7% Q/Q in Q4. Q1 shipments are expected to drop in-line with seasonality.
- He also points out tablet shipment growth is decelerating, and forecasts shipments will only rise 25% in 2014 (down from 53% in 2013).
- Danely's optimism contrasts with another bearish Intel note from Bernstein's Stacy Rasgon, who estimates five mobile CPU sales are needed to make up for one PC CPU sale, and doubts Intel's foundry business will move the needle.
- PC industry gainers: MSFT +2.3%. HPQ +2.6%. AMD +4.1%. NVDA +3.1%.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
- Previous: Goldman on Intel's Q4, Gartner/IDC's Q4 PC estimates, Intel's light 2014 guidance
Jan. 9, 2014, 9:41 AM
- Alcatel-Lucent (ALU -4.6%) has been cut to Hold by Deutsche, while rival Ericsson (ERIC -0.2%) has been upgraded to Buy. However, Morgan Stanley has started Alcatel at Overweight.
- Nvidia (NVDA -2.1%) has been cut to Hold by Canaccord a few days after unveiling its Tegra K1 app processors.
- Angie's List (ANGI +9.1%) has been upgraded to Strong Buy by Raymond James.
- Autodesk (ADSK +2.1%) has been upgraded to Overweight by Evercore.
- Chipmaker STMicroelectronics (STM -1.2%) has been cut to Sell by Deutsche, and CPU core licensing giant ARM (ARMH -5.5%) has been cut to Hold.
- EXFO (EXFO -8.3%) has been cut to Hold by TD Securities, and to Underperform by CIBC, after missing FQ1 estimates and providing soft FQ2 guidance.
- ASML (ASML +0.9%) has been started at Buy by ING.
NVIDIA Corp. is a visual computing company, connecting people through computer graphics. It is engaged in creating graphics chips, which is used in personal computers. The company operates through two segments: Graphics Processing Unit (GPU) and Tegra Processor. The GPU segment includes sales of... More
Industry: Semiconductor - Specialized
Country: United States
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