Nvidia likely to show continued growth in cloud and gaming despite sector weakness
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Nvidia (NASDAQ:NVDA) is slated to report first-quarter results after the close of trading today and investors, who have worried about a number of topics in recent months, are likely to see the company show continuing strength in its cloud and gaming segments, according to investment firm Bank of America.
Analyst Vivek Arya, who has a buy rating on Nvidia (NVDA) shares and a per-share price target of $320, noted that the overall semiconductor sector is still seeing strength, though that could be due to "tight supply conditions," as investors worry this is the "calm before a potential [2023] recession storm."
However, any signs of a recovery in China's COVID-related lockdowns, as well as affirmation of seasonal PC and smartphone demand, resilience in the data center and enterprise and recovery in Nvidia (NVDA), Advanced Micro Devices (AMD) and Marvell Technology (MRVL) shares could help the broader sector.
A consensus of Wall Street analysts expects the Jensen Huang-led Nvidia (NVDA) to earn $1.29 per share on $8.09 billion in revenue.
Regarding the recent decline in share prices in the sector, Arya notes it "appears to be more about resetting valuation per the new rate regime as opposed to a structural shift in demand drivers," noting that Nvidia (NVDA) and other cloud computing-related names, such as AMD (AMD), Marvell (MRVL) and Broadcom (AVGO) are "ideas exposed to resilient demand."
Other semiconductor companies that are exposed to resilient demand include those related to the automotive industry such as On Semiconductor (ON) and NXP Semiconductors (NXPI) and semiconductor equipment companies, including KLA Corp. (KLAC), Applied Materials (AMAT) and others.
On Monday, investment firm Morgan Stanley said Marvell Technology (MRVL) and Nvidia (NVDA) have the potential to report strong quarterly results this week, highlighting strength in telecom, networking and cloud spending.