Benzinga - Oppenheimer Research is advising investors to concentrate on development in Nvidia Corporation's (NASDAQ: NVDA) key data center business in 2023 despite the company's issues with restrictions on chip sales to China and declining PC demand.
What To Know: The Advanced Micro Devices (NASDAQ:AMD), Inc. (NASDAQ: AMD) rival chipmaker is set to report third-quarter earnings on Wednesday, Nov. 16. Wall Street expects the company to post earnings of 71 cents a share on revenue of $5.8 billion.
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Sales for the company's most significant business, its data center segment, are anticipated to decline by a percentage in the single digits from the prior quarter. A danger for the corporation has been a decrease in Chinese semiconductor demand.
What The Analyst Says: Oppenheimer analyst Rick Schafer is reducing his estimates on Nvidia ahead of its earnings report, dropping the price target from $250 to $225 and maintaining an Outperform rating.
The analyst sees enterprise spending weakness for Nvidia while waiting for the full effects of the recent U.S./China chip restrictions.
“Management expects a a $400M impact to [data center] in F3Q as U.S. restricts H100/A100 accelerator sales to China,” Schafer said in a note.
Despite enterprise project pushouts and U.S. export limitations balancing out substantial U.S. hyperscale spend, he predicts the data center segment will meet forecasts for the third quarter.
A positive factor Schafer notes is that he expects Nvidia’s auto segment to be up 2% quarter-over-quarter and 66% year-over-year as the still-nascent auto segment is led by increasing advanced driver-assistance system adoption.
“Nvidia has transformed from a graphics company to a premier leading AI computing platform company,” the analyst said.
Schafer noted that the risks to his $225 price target include:
- Slowdown in macroeconomic market or implications from geopolitical factors of tariffs/trade wars
- Loss of market share from competition with AMD in GPUs
- Technology manufacturing disruptions at key foundry Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM)
- Concentrated DC spending by the top seven hyperscalers
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- Photo courtesy of Nvidia.
| Mar 2022 | Goldman Sachs (NYSE:GS) | Reinstates | Neutral | |
| Feb 2022 | Summit Insights Group | Downgrades | Buy | Hold |
| Feb 2022 | Mizuho | Maintains | Buy |
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