Nvidia’s Data Center Silver Lining.
$NVIDIA(NVDA.US$ $Direxion Daily Semiconductor Bull 3x Shares ETF(SOXL.US$ $PHLX Semiconductor Index(.SOX.US$ The preliminary earnings for NVDA stock helped to briefly give credence to the bearish view that, as economic growth slows down compared to the boom times of 2021, the company’s own growth will take a big hit.
However, as I argued at the start of August, its strength in some areas , could outweigh weakness in other areas. The latest numbers from Nvidia could help to back this view. How so? Gaming results for Q2 may be disappointing, but it could be a different story with its data center results.
Revenue for the segment is expected to jump 61% year-over-year. Demand from enterprise end-users continues to be robust. Furthermore, although results were up just 1% sequentially, don’t blame it on weak demand. At least, that’s the view of Raymond James’ Melissa Fairbanks. In her last research note, released after the preliminary earnings numbers, Fairbanks reiterated her “buy” rating, although she did trim her price target.
More importantly, the analyst noted that the weak sequential growth with the data center unit was due to supply chain issues, not demand issues. This could mean a re-acceleration of growth as supply bottlenecks clear up.
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