On Thursday, Jefferies maintained its Buy rating on NVIDIA (NASDAQ:NVDA) with a consistent price target of $185.00. The firm's analysis acknowledged that NVIDIA's recent performance slightly missed expectations but emphasized a strong outlook for the company's Blackwell processors. The anticipated increase in Blackwell demand is expected to boost NVIDIA's performance as the products gain market qualification and manufacturing scales up.
The report also noted a decline in networking revenue in October, with a 16% quarter-over-quarter decrease. However, this sector saw some sequential improvement across various product lines, including InfiniBand, Ethernet switches, SmartNICs, and Bluefield Data Processing Units (DPUs). The firm anticipates a recovery in this segment as Blackwell's production advances.
Gross margins (GMs) are projected to experience a dip in April, falling to the low 70s percentage range, but are forecasted to rebound to the mid-70s thereafter. Jefferies pointed out that the current quarter was not expected to produce extraordinary results for NVIDIA, suggesting that the minor issues raised in the earnings call do not present significant concern.
The firm remains optimistic about NVIDIA's earnings potential, citing a possible path to over $5 in earnings per share (EPS) next year. Despite NVIDIA's challenges with high expectations, Jefferies believes that the company is entering a phase of accelerated business momentum as Blackwell production ramps up, historically signaling a strategic opportunity to invest in the stock.
In other recent news, NVIDIA Corporation (NASDAQ:NVDA) has experienced major developments in its financial performance and product advancements. The company reported a record-breaking total revenue of $35.1 billion, marking a 94% increase from the previous year, due to robust demand for AI infrastructure. Data center revenues have climbed to approximately $30.8 billion, contributing significantly to the financial success.
Wedbush Securities, Truist Securities, Piper Sandler, TD Cowen, and Cantor Fitzgerald have all recently adjusted their outlooks on NVIDIA. These adjustments follow NVIDIA's recent updates on its Blackwell product's progress and the resolution of potential concerns. Wedbush Securities increased the price target from $160.00 to $175.00, maintaining an Outperform rating on the stock. Truist Securities updated its price target to $169 from the previous $167, while reaffirming a Buy rating on the stock.
Piper Sandler confirmed its Overweight rating for NVIDIA with a consistent price target of $175.00. TD Cowen updated its view on NVIDIA, raising the price target to $175 from $165, while maintaining a Buy rating on the stock. Cantor Fitzgerald maintained a positive outlook on NVIDIA, reiterating an Overweight rating and a $175.00 price target for the stock.
NVIDIA anticipates a Q4 revenue of $37.5 billion and expects a temporary dip in gross margins during the Blackwell product ramp, but projects a return to mid-70s margins shortly.
InvestingPro Insights
NVIDIA's recent performance, as highlighted in the Jefferies report, aligns with several key metrics and insights from InvestingPro. The company's market capitalization stands at an impressive $3.56 trillion, reflecting its dominant position in the semiconductor industry. NVIDIA's revenue growth of 194.69% over the last twelve months and 122.4% in the most recent quarter underscores the strong demand for its products, particularly in the AI sector.
InvestingPro Tips reveal that NVIDIA has a perfect Piotroski Score of 9, indicating strong financial health and operational efficiency. This score supports Jefferies' optimistic outlook on the company's future earnings potential. Additionally, the tip noting that analysts anticipate sales growth in the current year aligns with the expected ramp-up of Blackwell processor production mentioned in the article.
The company's gross profit margin of 75.98% in the last twelve months is consistent with Jefferies' projection of gross margins rebounding to the mid-70s range. This impressive margin, coupled with NVIDIA's operating income margin of 61.87%, demonstrates the company's ability to maintain profitability even as it scales up production of new products like Blackwell.
For investors seeking more comprehensive analysis, InvestingPro offers 22 additional tips for NVIDIA, providing a deeper understanding of the company's financial position and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.