Munster On Nvidia's Q4: 'Its Products Are A Foundational Part Of The Future Of Technology'

NVIDIA Corporation NVDA closed down nearly 5 percent Thursday ahead of the firm’s earnings report, broadly discrediting the foresight of investors.

The semiconductor manufacturer reported fourth-quarter revenue of $2.9 billion against a $2.7-billion estimate and earnings per share of $1.72 against the Street’s $1.16 estimate. Shares spiked 14 percent, and bulls emerged to gloat.

The Rating

Loup Ventures managing partner Gene Munster does not issue ratings but remains bullish on Nvidia.

The Thesis

The optimism is justified by continued and, as Munster anticipates, continuing growth in data center, automotive and gaming opportunities.

“Tonight’s results are further evidence of the magnitude of the opportunity ahead of Nvidia,” Munster said in a late-Thursday note. “Its products are a foundational part of the future of technology.”

Nvidia’s data center segment, which supports the artificial intelligence projects of the likes of Amazon.com, Inc. AMZN and Alphabet Inc GOOGL, posted 105-percent year-over-year revenue growth — and expansion could continue.

“We’re in the early innings of artificial intelligence, and just as all companies evolved to be internet companies in the early 2000s and mobile companies in the late 2000s, they will soon evolve to be AI companies,” Munster said. 

The AI opportunity supplements growth in automotive revenue, Nvidia’s “biggest opportunity.” Munster said he expects autos to account for 13 percent of Nvidia’s revenue in 2023, up from today’s 6 percent.

Nvidia's gaming business, the revenue of which increased 29 percent year-over-year on the back of cryptocurrency and quality new video games, “remains promising” long-term, Munster said. 

Price Action

At the time of publication, shares were up 5.98 percent at $230.52

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Photo courtesy of Nvidia.