KeyBanc analyst John Vinh reiterated Overweight on Nvidia Corp NVDA and a price target of $230. He preferred to be the buyer of NVDA, which reports its quarterly results on August 24.
Vinh expects 2Q results to align with the company’s negative preannouncement on August 8 and expects 2Q to mark the bottom.
Importantly, channel inventories have come down from ~four months in April to now back to normalized levels at ~two months, derisking gaming estimates.
Nvidia pulled in the launch of RTX40 into C4Q. The data center demand remains strong, according to KeyBanc’s cloud tracker results. In contrast, the repurposing of gaming GPUs for data centers and auto should address supply constraints and support the resumption of growth.
NVDA traded at 33x of his FY24 EPS estimate, he noted. By comparison, peers traded at a median consensus 2023 P/E multiple of 21x, implying a premium to its peer group median multiple.
NVDA remains uniquely positioned to benefit from industry AI/ML secular data center growth, Vinh stated. He saw limited competitive risks with significant barriers to entry created by its CUDA software stack.
The analyst expected NVDA to continue to dominate one of the fastest-growing workloads in cloud and enterprise. While the early days, Omniverse represents an emerging software subscription revenue stream for metaverse applications likely to support further re-rating of the multiple as it grows and scales, he added.
Price Action: NVDA shares traded lower by 3.62% at $172 on the last check Monday.
Photo by Nana Dua from Pixabay
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