We might be in the midst of the worst pandemic in a century, but it doesn’t seem to be slowing down premium graphics chipmaker Nvidia (NASDAQ: NVDA) stock all that much.
Nvidia stock is regularly hitting new all-time highs these days, and some of the buzz built into the stock price is due to its help in the fight against Covid-19.
Nvidia’s graphics chips do more than just power video game consoles and gaming PCs. They are also used in many of the biggest tech trends of the past decade, including data center management, cryptocurrency mining, and artificial intelligence.
And more recently, Nvidia’s chips have been used by researchers studying the genome of the novel coronavirus. And taking it a step further, Nvidia recently asked gamers using its chips to donate spare processing capacity to the effort.
Nvidia Corp. could escape severe effects from COVID-19 because of the strong demand for artificial intelligence capabilities in cloud data centers and a whole bunch of people playing videogames.
Nvidia (NVDA), +1.86% is expected to top $1 billion in quarterly data-center sales for the first time when it reports first-quarter earnings after the close of trading on Thursday, even as it launches new products in that area. Sales of gaming chips are expected to grow roughly 25% from last year as Americans sheltering in place turn to virtual worlds for entertainment.
Expectations for Nvidia have slipped only barely since the coronavirus began to sweep across the globe, as analysts see continuing demand for its products and continuing strong results from other large chip makers. Intel Corp. INTC, +4.66%, and Advanced Micro Devices Inc. AMD, +1.65% have shown the chip sector is benefiting from increased demand from PC and gaming console makers as a result of shelter-in-place mandates from COVID-19, while the infrastructure that supports digital work/play-from-home lifestyles — namely, data centers — is also receiving a boost.
Confidence in the positioning of Nvidia and semiconductors, in general, has led investors to push the company’s stock to record highs, picking back up from when the company reported fourth-quarter earnings on Feb. 14, about a month before the COVID-19 pandemic was declared.
What the numbers are saying?
Revenue: Analysts surveyed by FactSet expect Nvidia, on average, to report revenue of $2.98 billion, up from $2.22 billion in the year-ago period. Nvidia had forecast revenue of $2.94 billion to $3.06 billion for the quarter in February. Analysts have barely budged from an average forecast of $3 billion at the end of February despite the spread of COVID-19.
Analysts expect a 24% rise in gaming sales to $1.3 billion from a year ago, and a 62% surge in data-center sales to $1.03 billion, which would be Nvidia’s first-quarter where data-center sales top the billion-dollar mark. In the fourth quarter, data-center sales came in at a record of $968 million.
Nvidia LONG (Buy)
Enter at: 361.72