Nvidia Corp. NVDA shares were advancing on Thursday following the release of its fiscal year 2023, third-quarter results.
The Nvidia Analyst: KeyBanc Capital Markets analyst John Vinh maintained an Overweight rating and $230 price target for Nvidia shares.
The Nvidia Thesis: Nvidia reported mixed quarterly results, with a revenue beat but earnings per share, or EPS, miss and guided in line, Vinh said in a note. The EPS miss reflected a $702 million write-down of the A100 chips, likely due to the China export ban, he said.
Among business segments, gaming revenue fell 23% quarter-over-quarter and 51% year-over-year, mainly due to softness in Asia, the analyst noted. The company continues to under-ship in the fourth quarter, with channel inventories likely reaching normal levels exiting the fourth quarter, Vinh said, citing the company.
Vinh noted that data center revenue grew 1% sequentially and 31% year-over-year, with continued robust demand in the U.S. cloud and vertical industries such as auto and energy. The company managed to offset the impact of China export restrictions with the alternative A800 chips, he added.
Despite China softness, the analyst expects Hopper GPU ramp to outpace Ampere.
Nvidia’s fourth-quarter guidance, Vinh said, implied modest growth in data center, gaming and auto, offset by weak China data center and inventory headwinds in gaming.
“We are encouraged with results/guidance as NVDA overcame the China export restrictions and put in a bottom,” Vinh said.
Price Action: In premarket trading, Nvidia shares were rising 2.06% to $162.37, according to Benzinga Pro data.
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