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Anusuya Lahiri

Here's Why Piper Sandler Is Optimistic On Nvidia

  • Piper Sandler analyst Harsh Kumar reiterated an Overweight rating and $350 price target on NVIDIA Corp (NASDAQ:NVDA).
  • Nvidia could be a big winner this earnings season, with profits driven by solid performance in the chip maker's gaming and data center businesses, Kumar said.
  • "We are looking for a significant beat and raise when the company reports earnings on Wednesday after market close, as both gaming and data center continue to perform well," Kumar added.
  • He said a new upgrade cycle in GPUs could drive growth in gaming. 
  • Kumar projects a 4.3% quarter-over-quarter increase for the January quarter, which the company could beat, he added.
  • Although demand for gaming remains strong and will continue to grow over the next few quarters, Kumar believes Nvidia's data center business will drive revenue this quarter. 
  • The analyst sees data center trends accelerating in 2022 and predicts 7.5% sequential growth this quarter. 
  • With trends reaccelerating, he added that the data center business could even reach double-digit growth.
  • "We believe the data center business will be responsible for much of the revenue performance, translating to both an EPS and revenue beat," he said.
  • Kumar noted Nvidia "is supply-constrained at this point in time," affecting both the gaming and data center business. 
  • Regardless, he added that the company is better positioned to get supply than competitors. 
  • He expects the next quarter's guidance to be up sequentially, even if gaming sales have historically been flat during the April quarter.
  • On Monday, Truist analysts also expressed an optimistic view of Nvidia's earnings.
  • Price Action: NVDA shares traded higher by 9.02% at $264.44 on the last check Tuesday.
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