IC Insights Research Predicts 35% Sales Growth for NVIDIA (NVDA)

By Carrie Williams

Stock market on laptopThe leading GPU manufacturer NVIDIA Corporation (NASDAQ: NVDA) is currently powering on towards its 52-week high of $92.56, thanks to a great fiscal third quarter, positive Q4 outlook, smart collaborations with industry giants like IBM and Microsoft, growth in almost all of its major business segments, as well as continuing expansion in the company’s technology offerings.

The company received yet another positive yesterday when the IC Insights market research predicted a 35% on-year sales growth for NVDA and appraised it as one of the fastest-growing semiconductor companies for 2016. Reacting to the news, Rick Schafer of Oppenheimer reiterated their ‘Hold’ rating. NVDA is currently trading at $91.63, well above its 50-day SMA of $67.68.

Nvidia had blown past the earnings expectations of Q3 by reporting an EPS of $0.94 which beat street estimates by $0.37 and a revenue of $2 billion (+53.8% YoY), which was $310 million higher than the street estimates last Thursday, November 10. The shares prices of NVDA opened the next day with a surge of 13.6%, thanks to the stellar Q3 results.

The major revenue contributor for NVDA in Q3 was Pascal-based GPUs as per CEO Jen-Hsun Huang. The Pascal-based P6000 is also currently gathering interest from a multitude of companies like Pixar, Disney, ILM, Japan’s SHIMIZU, and Hyundai. The huge growth in the artificial intelligence (AI) market resulted in tripling the company’s data center segment revenue as well. NVDA has also collaborated with Microsoft to create a lightning-fast AI platform using a framework designed to run on Nvidia Tesla GPUs in Microsoft Azure or on-premises.

NVDA has also broached its entry into deep learning arena by partnering with IBM. NVDA provided the Nvidia NVLink technology optimized for IBM’s Power Architecture for IBM’s PowerAI software kit. This is intended for deep learning and other advanced analytic technologies.

NVIDIA has quite a few projects in the pipeline as well. Nintendo’s much anticipated forthcoming Switch console is being powered by a custom Tegra chip from NVDA. Automotive partnerships with Baidu (for the development of cloud-to-car HD maps and level 3 autonomous driving), TomTom (for AI-based cloud-to-car mapping system) and Tesla (for semi-autonomous driving partnership) is already in motion. The company is also currently developing an end-to-end AI computing platform for autonomous driving.

Based on the recent corporate insider activity of 76 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been a decrease of insiders buying their shares of Nvidia in relation to earlier this year. Recently, NVDA Director Brooke Seawell sold 35,000 shares of the stock for a total value of $3,070,900.

According to analysts’ recommendations from the past three months on NVDA, the overall consensus rating on the stock is a Moderate Buy. The analysts have an average price target of $86.19, based on data by TipRanks.com. This PT is a downside of 5.94% from the last close price.