by SignalFactory · February 13, 2020 | 08:27:39 UTC
The
Graphics chip giant Nvidia (NVDA) is set to report its Q4 2020 earnings after
the bell on Thursday amid a strong rebound in the data center industry and the
ongoing impact of the coronavirus sweeping across the tech landscape.
Here
are the most important numbers analysts will be looking at in the report as
compiled by Bloomberg, and how they compare to the same quarter last year.
Revenue:
$2.96 billion expected versus $2.2 billion in Q4 2019
Earnings
per share: $1.66 expected versus $0.92 in Q4 2019
Nvidia’s
year-over-year performance is expected to get a bump from the increase in
hyper-scale cloud companies buying up the chip maker’s data center offerings.
Capital expenditures on servers and cloud-related components have seen an
uptick in recent quarters, as evidenced by Intel’s strong Q4 earnings report
last month.
“We believe [Nvidia] should see a similar benefit from
better than expected data center/cloud consumption as we saw with reports from
peers such as [Intel] (INTC) and [Mellanox] (MLNX), and would not be surprised
if [Nvidia] reports above the 10% sequential growth we had modeled for this
segment,” Wedbush analyst Matt Bryson wrote in an research note ahead of
Nvidia’s earnings.
UBS
analyst Timothy Arcuri similarly sees Nvidia’s data center business as a
continued bright spot for the company. In January, Arcuri raised his price
target for the chipmaker to $300 from $240 on the strength of its data center
platforms.
Nvidia
is also in the midst of a $6.9 billion acquisition of networking company
Mellanox Technologies. Analysts and investors are certainly hoping to hear more
about when the deal will be finalized by international regulators. In Q3 2020,
Nvidia said that it was making progress with European Union and Chinese
authorities, and predicted the deal would wrap up in early 2020.
While
Nvidia’s data center business is the darling of investors and analysts alike
thanks to its future growth potential, the company’s gaming business is still
its main revenue driver. In Q3 2020, for instance, gaming brought in $1.66
billion, while the data center side of the firm brought in $726 million.
Wedbush’s
Bryson isn’t expecting a huge beat by Nvidia’s gaming arm for the quarter,
though, despite the fact that PC sales saw their first full year of growth in
eight years in 2019.
“While PC sales in CQ4 were clearly better than expected,
we are less certain gaming PC results realized similar upside,” he wrote.
“Net, we certainly don’t see NVDA missing our numbers, particularly as our
model anticipates a Q /Q decline of roughly 7%, but we also are not
anticipating a larger beat in this segment.”
Nvidia
also recently launched its GeForce Now game streaming service, bringing the
long-awaited service out of beta, and offering it for $4.99 a month. But
shortly after it was announced, Activision Blizzard (ATVI) pulled its games and
Battle.net service from the platform, setting up what could be a major issue
for Nvidia moving forward.
As
with every tech company with exposure to China, there’s also fear that the
ongoing coronavirus outbreak in China could negatively impact Nvidia’s data
center, automotive, and gaming businesses. Nintendo, which uses Nvidia’s Tegra
processor in its Switch console, has already announced that products for its
Japanese domestic market will be hurt by the production slowdown in the region
as a result of the virus.
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