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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