NVIDIA's Blowout Quarter Helps It Remain A Top Pick At Jefferies

After market close on Thursday, NVIDIA Corporation NVDA reported Q3 results, which blew away Street estimates. Midday Friday, the stock was trading up over 25 percent.

Positive Quarter In Review

The positive quarter led Jefferies analyst Mark Lipacis to increase his price target for the company from $80 to $95 while maintaining a Buy rating and keeping the stock as a top pick at Jefferies. The positive quarter (EPS beat of $0.27 and revenue beat of 19 percent) reinforced the analyst view that a NVIDIA investment would be playing on three trends: gaming, datacenter and automotive — all of which saw substantial year-over-year growth:

• Gaming: 62 percent of NVIDIA’s sales, 63 percent growth year-over-year.
• Datacenter: 12 percent of sales, 193 percent growth year-over-year.
• Automotive: 6 percent of sales, 61 percent growth year-over-year.

Additionally, Lipacis sees new growth opportunity for NVIDIA in the emerging deep learning systems market.

The Tesla Element

Tesla Motors Inc TSLA announced that it will use NVIDIA’s GPU’s to power deep learning in all its vehicles.

“If Tesla is successful,” said the analyst, “we think every major Auto maker will have to have a similar capability.”

NVIDIA's GPU’s are powering web searches, speech and facial recognition, and credit card fraud identification.

“We expect Deep Learning will ultimately penetrate industries where there is lots of data — and can imagine deep learning systems trained to read x-rays, operate robots for manual labor, search/ process legal documents, handle customer service requests, create designer genes, and perhaps one day, even write sell-side research reports,” said Lipacis.

At last check, NVIDIA was up 28.02 percent at $86.76.

Image Credit: By Mahogny (Camera) [Public domain], via Wikimedia Commons