Oppenheimer's Takeaways From Meeting With The NVIDIA CFO At CES

At a meeting with CFO Colette Kress and the IR team from NVIDIA Corporation NVDA at CES 2017, Oppenheimer’s Rick Schafer noted that management’s tone was positive, with a “steady as she goes” outlook, as the company continued to execute on various growth drivers, such as gaming, automotive and AI.

Following the sitdown, Schafer maintained a Perform rating on the best performing S&P 500 stock of 2016. 

CES Takeaways

“CEO Jen-Hsun Huang kicked off CES with his annual keynote, announcing GeForce Now, which delivers NVDA GPU technology to users via the cloud, an upgraded Shield incorporating AI and personal assistant capabilities to its streaming device,” the analyst mentioned.

Management also provided fresh details regarding plans to roll out autonomous driving vehicles, in collaboration with Audi, by 2020.

“While these greenfield initiatives will take time to root, we believe they represent a broader strategic trend by NVIDIA to leverage its industry-leading GPU technology, and its inherent technological strength in AI, to more pervasive applications,” Schafer stated.

What To Expect

In gaming, NVIDIA expects the momentum that led to 33 percent growth in 2016 to persist, driven by upgrades to its Pascal, ASP [average selling price] increase due to user demand for higher performance SKUs [stock keeping units], as well as next-gen Volta GPU, expected later in 2017.

“Auto growth is expected to moderate as infotainment matures and Drive PX for autonomous driving applications begins its nascent ramp. DC [direct-to-consumer], however, should continue its momentum as NVDA continues to dominate the AI training market driving growth in Tesla and GRID,” the analyst added.

Schafer believes that the stock now faces increasing difficult comps and would prefer to wait for a more attractive entry point.