|Bid||110.62 x 800|
|Ask||110.83 x 800|
|Day's Range||110.50 - 110.83|
|52 Week Range||65.68 - 121.13|
|Beta (3Y Monthly)||0.12|
|PE Ratio (TTM)||36.77|
|Earnings Date||Oct 22, 2019 - Oct 28, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||123.75|
American chipmaker Nvidia (NASDAQ:NVDA) has seen its value surge over the past several months. After a 1.96% percent gain on Wednesday, Nvidia stock is now up about 35% since the start of June and 37% in 2019.NVDA got a big boost on Monday, when several prominent Wall Street analysts substantially raised their 12-month price targets on Nvidia stock. With bullish analysts suggesting that NVDA can climb 20%, is it time to invest in NVDA stock?Source: NPS_87 / Shutterstock.com If everything goes perfectly for Nvidia, the case could certainly be made that it's a buy. However, there are a number of factors that could cool Nvidia's growth, with China looming large on that list.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Case for Buying Nvidia StockNVDA is definitely an attractive stock at the moment. Even though, as mentioned, it's up 37% in 2019, it's still 33% below the level it hit in September 2018. * 7 A-Rated Stocks Under $10 RBC Capital raised its price target on Nvidia stock to $217 on Monday, triggering a rally by Nvidia stock. RBC is not the only firm that's upbeat on NVDA stock. The Wall Street Journal is tracking 37 analysts, and of those, 24 rate NVDA as a "buy." Among the reasons for RBC's upgrade is Nvidia's pending purchase of Mellanox Technologies (NASDAQ:MLNX). The $6.9 billion dollar deal will give NVDA's data-center business a big boost. With the Mellanox deal, Nvidia is positioning itself to be a much bigger player in the explosive world data center market. In 2018 alone, companies like Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) spent $152 billion on hardware and software for data centers. RBC thinks that spending could raise Nvidia's data-center revenue by 100% in the near-term, with sustained growth in the high-double-digit-percentage range.The growth of Nvidia's video-game business and its automotive division are also seen as likely to boost NVDA stock. The revenue of the automotive division -- which supplies chips for autonomous driving systems -- reached a record $209 million last quarter. Factors That Could Derail the Recovery of NVDAWhile there are clearly plenty of reasons to be optimistic about Nvidia stock, there are also factors that could stunt NVDA's growth.While the increase of automotive revenue is good news, graphics cards for gaming still generate half of NVDA's sales. Last quarter, the unit's revenue sank 27% year-over-year to $1.3 billion. That's the result of a lasting "crypto hangover" from the crash of the cryptocurrency market. But the gaming division faces a tough adversary in rival Advanced Micro Devices (NASDAQ:AMD). AMD is aggressively attacking Nvidia in the gaming market and gaining market share in the space.AMD just announced yet another new graphics card that it claims outperforms Nvidia's equivalent card by a wide margin. And when next year's new generation of gaming consoles is released, AMD will be powering the Playstation 5 and the Xbox Scarlett. China remains a huge variable. It's estimated that 44% of Nvidia's revenue comes from the Chinese market. That makes Nvidia stock vulnerable to any escalation in the ongoing trade war between the U.S. and China.And speaking of China, that could be a problem when it comes to Mellanox as well. As InvestorPlace's Vince Martin pointed out, Mellanox is far from a done deal at this point, and China could block the acquisition.At the end of the day, the analysts feel that Nvidia stock is a solid buy. And if all goes according to plan, NVDA could outperform their average price target of $188.70 and hit RBC Capital's $217 target. But I wouldn't count on everything going right for Nvidia stock, especially with the huge China variable and rival AMD coming at NVDA with guns blazing.As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Super Boring Stocks to Buy With Super Safe Returns * 10 Winning Stocks to Buy and Stick With for the Long Haul * Don't Give Up on These 4 Cannabis Stocks The post Is Now the Time to Buy Nvidia Stock? appeared first on InvestorPlace.
Mellanox® Technologies, Ltd. , a leading supplier of high-performance, end-to-end interconnect solutions for data center servers and storage systems, today announced that it will release its financial results via press release for the third quarter 2019 after the market closes on Wednesday, October 30, 2019.
ConnectX Delivers Higher Performance, Scalability and Efficiency for Cloud Networking Workloads in Side-by-Side Comparison
First Switch Vendor to Offer Full-Stack Support for SONiC Alongside Expanded Portfolio of OCP SmartNICs to Simplify Open Networking in Cloud, Telco and Enterprise Data Centers
Nvidia (NASDAQ:NVDA) stock has seen a nice bump since August. Shares have popped from a low of $148.77 on Aug. 15 to $180.24 at the close Sept. 17. With positive developments in the U.S.-China trade war and improving fundamentals for the GPU space, Nvidia's fortunes may be turning around.Source: michelmond / Shutterstock.com But is there enough left in the tank to send NVDA stock higher? Based on valuation, it seems most catalysts are priced in the stock. Nevertheless, NVDA sells at a discount to GPU rival Advanced Micro Devices (NASDAQ:AMD).So what's the verdict? Let's take a closer look at Nvidia stock, and see why now may not be the time to buy.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Key Developments Driving the Nvidia Stock PriceWeak GPU demand and the U.S.-China trade war. These two factors hammered Nvidia stock. But a turnaround in chip sales and optimism over a trade deal have mitigated these concerns. Improved investor sentiment is driving NVDA stock higher. The question is: Will it last?With regards to GPU demand, Nvidia's sales results for the past quarter show promise. For the quarter ending July 30, revenue rose from $2.2 billion to $2.6 billion quarter-over-quarter. Gaming sales rose 24% from the prior quarter, from $1.1 billion to $1.3 billion. But sales remain down year-over-year. Overall sales were $3.1 billion in the prior year's quarter, including gaming sales of $1.8 billion. Nvidia has a long ways to go before reaching the high water mark set in the prior year. * 7 CBD Stocks to Buy That Are Still Worth Your Investment Dollars How about the U.S.-China trade war? Investors are optimistic, but corporate America remains bearish. The unpredictability of the trade war could continue to impact Nvidia's business. It could also impact an upcoming acquisition. As InvestorPlace's Tom Taulli wrote on Sept. 12, China could block Nvidia's proposed acquisition of Mellanox (NASDAQ:MLNX). The Mellanox deal is seen as a positive catalyst for NVDA. The deal would bolster Nvidia's data center business, and help it diversify away from GPUs.But what about artificial intelligence? The rise of AI could be Nvidia's saving grace. On Sept. 13, InvestorPlace's Jamie Johnson pointed out how Nvidia's automotive AI business saw sales grow 30% in the past quarter. AI has yet to reach critical mass, but in the next decade could emerge as a major industry. This would give Nvidia stock a clear pathway to growth.However, as seen below, this growth potential is clearly reflected in the valuation of NVDA stock. Does this mean shares are overvalued? Let's see how Nvidia's valuation compares to peers. NVDA Stock Remains OvervaluedDespite declining sales since 2018, Nvidia stock remains richly priced. The company's forward price-to-earnings ratio is 25.5. Nvidia's enterprise value/EBITDA is 40. But shares continue to trade at a discount to rival AMD. AMD stock trades at 28.3 times forward earnings, and has an EV/EBITDA ratio of 67.Does this mean Nvidia stock is undervalued? Possibly, but it could indicate AMD remains overvalued. Both stocks trade at premiums to broad-line chip makers like Intel (NASDAQ:INTC) and Broadcom (NASDAQ:AVGO). Intel's forward P/E is 11.6, and its EV/EBITDA ratio is 7.6. Broadcom trades at a forward P/E of 12.4, and a EV/EBITDA ratio of 14.3.As I have stated before, I do not understand the high premium assigned to GPU makers relative to broad-line chip makers. As seen from the global GPU glut, substantial sales growth is uncertain. Long term, I can easily see both NVDA and AMD trade at valuations similar to INTC and AVGO. Maybe not as cheap as Intel stock, but certainly at similar EV/EBITDA ratios as Broadcom. It's Tough To Predict Nvidia Stock's FutureAll bets are off with Nvidia stock. While the company has seen improvements in its overall business, sales remain down from the prior year. There's light at the end of the tunnel for the trade war, but uncertainty remains. Nvidia next announces results in November. The analyst community sees quarterly sales at around $2.9 billion. China could give their blessing to the Mellanox deal. If so, the deal could close at the end of 2019.So what's the play with Nvidia stock? I have been on the sidelines since July, and shares have traded sideways since. If the company can reach the high water mark set last year, shares should see material improvement. But until then, sideways trading between $150-$200 per share is likely. Continue to stay on the sidelines with Nvidia stock.As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 CBD Stocks to Buy That Are Still Worth Your Investment Dollars * 5 Stocks to Buy With Great Charts * 5 Goldman Sachs Stocks to Buy with Over 20% Upside Potential The post All Bets Are Off With the Nvidia Stock Rally appeared first on InvestorPlace.
Recently Introduced ConnectX-6 Dx and BlueField-2 SmartNICs and I/O Processing Units are Expected to Fuel Further Growth
Nvidia (NASDAQ:NVDA) has been stuck in a trading range between $160 - $180 since July. Although Nvidia stock could easily break-out as its growth potential returns, China tariffs may pressure chip stocks in the weeks ahead.Source: Hairem / Shutterstock.com The investor who chooses to buy Nvidia stock, betting that the trade war tensions will end, risks macro headwinds. And those who wait it out may miss out on a rally if Nvidia reports strong quarterly results in November. What should investors do? Look Beyond Short-TermNvidia is perfectly positioned to embrace the long-term growth in AI, IoT, and autonomous capabilities. CEO Jen-Hsun describes AI as being thousands of different types of networks. These networks get more complex over time, and the data that gets processed gets bigger. As a result, AI software cannot predict what is going to get programmed. Nvidia's CUDA architecture is programmable, with its Tensor Cores are optimized for AI.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Deeply Discounted Energy Stocks to Buy Software capabilities that combine IoT with AI will be the next phase of growth. Nvidia is well-positioned to lead the market when this phase begins. Within many sectors, automation is the future and is something that will happen.This transformation is still in the early phases, so the company will not realize its potential until later. To position itself for these markets, Nvidia is investing heavily in itself. In its second quarter, the company reported GAAP operating expenses of $970 million. It is on-track to grow operating expenses in the high single digits.NVDA singled out AI, graphics, and self-driving cars are the key platforms that will drive its long-term growth. Despite GAAP EPS falling 49% to $0.90, Nvidia is clear on its Q3 outlook. It forecast revenue of $2.9 billion and GAAP and non-GAAP gross margins at 62% and 62.5%, respectively. Capital expenditures will be in the range of $100 million to $120 million. Nvidia's Outlook for GamingSeasonal strength for Nintendo Switch will result in a production ramp-up in Q2 and in Q3, then likely falling in Q4. RTX (real-time tracing) is a differentiating solution to GPUs made by Advanced Micro Devices (NASDAQ:AMD). In the last few months, Nvidia announced six blockbuster games that adopted RTX.There are now over 40 ISV tools that announced ray tracing and video editing, in the creative tools software space. Some of the applications have AI capabilities that fully utilize RTX.Looking ahead, NVDA stock may potentially price in the pickup in demand for RTX-powered GPUS and notebooks offering this technology. Nvidia also benefits from the trend of gamers demanding light notebooks that have powerful graphics. Its customers need such systems for 3D content creation and high-definition video editing and image optimization.The company introduced a new line of computers, called RTX Studio, that appears to such power users. Considering that the SUPER line of GPUs will spur sales in the quarters ahead and chances are good that the stock etches higher. Trade War Risks and Nvidia StockChip stocks are vulnerable to the tariff showdown between the U.S. and China. Such taxes hurt trade and weaken demand for semiconductor products. Nvidia is not immune to the impact escalating trade wars will have on trade.The lack of a trade deal between the two countries may threaten the Nvidia-Mellanox (NASDAQ:MLNX) merger. In March, Nvidia offered $6.9 billion, or $125 a share, for Mellanox and paid entirely in cash. MLNX stock topped $120 by May but fell to $107 recently. Markets are signaling a higher probability that the deal will fall through.Investors who held Qualcomm (NASDAQ:QCOM) and NXP Semiconductors (NASDAQ:NXPI) after the former offered to buy the latter did poorly holding NXPI stock. China's regulators failed to approve the deal in a timely fashion, forcing Qualcomm to abandon the deal. Valuation and Your TakeawayWall Street analysts are bullish on Nvidia stock and have an average $189.96 price target. Investors who prefer to build their own model may assign a ~7% revenue 5-year CAGR. In a DCF EBITDA Exit model that assumes revenue growth of up to 20%, the fair value is $186:(USD in millions) Input Projections Fiscal Years Ending 19-Jan 20-Jan 21-Jan 22-Jan 23-Jan 24-Jan Revenue 11,716 10,776 12,929 14,654 15,753 16,304 % Growth 20.60% -8.00% 20.00% 13.30% 7.50% 3.50% EBITDA 4,066 3,064 4,251 5,366 5,926 6,134 % of Revenue 34.70% 28.40% 32.90% 36.60% 37.60% 37.60%Source: finbox.ioStill, investors may look at Nvidia's intrinsic value based on future cash flow. In this scenario, NVDA stock has a significant downside (per simplywall.st).Investors willing to hold Nvidia for a few years should accumulate the stock if it falls. The trade war is a short-term headwind that will eventually get resolved as both countries negotiate.Disclosure: The author holds NXPI stock. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Deeply Discounted Energy Stocks to Buy * 7 Stocks to Buy In a Flat Market * 10 Stocks to Buy to Ride China's Emerging Wealth The post Buying Nvidia Stock Still Is a Great Move for the Long-Term Investor appeared first on InvestorPlace.
Investors looking for reasons to scoop up Nvidia (NASDAQ:NVDA) stock have certainly been able to find them. But the case against Nvidia stock hasn't been a terribly tough one to make either.Source: Hairem / Shutterstock.com This tug-of-war has been evident in Nvidia's stock chart and it has become more obvious recently . The highs of Nvidia stock are getting lower, but its lows are getting higher. The end result will be an inevitable, imminnt showdown between the bulls and the bears. * 7 Stocks to Buy In a Flat Market The outcome of that showdown, however, has less to do with the company's merits and more to do with investors' perception of NVDA stock. And that perception is going to be at least partially driven by the macro environment.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Mixed MessagesThat's not usually how the market works. Usually, stocks more or less reflect underlying companies' proven past, while factoring in their plausible future. The latter is always in flux. That's what drives charts.Sometimes though, traders aren't quite sure what to make of a company or its stock. That's when traders look to a chart for cues and clues about how to evaluate -- and trade -- the stock.That's where Nvidia stock is right now. Traders aren't sure where it's supposed to be.Advanced Micro Devices (NASDAQ:AMD) is, of course, a key part of that confusion. Last quarter, for the first time in five years, AMD shipped more graphics cards than Nvidia did.That data nugget, however, comes with a lot of footnotes. The figures include laptop GPUs, where Nvidia doesn't have much of a presence. And, leveraging its newest, much- ballyhooed RDMA gaming technology. Advanced Micro Devices launched a handful of new products like the Radeon RX 5700 series graphics cards,Meanwhile, Nvidia is the preferred hardware provider for artificial intelligence applications. That industry can spur more than $100 billion of hardware sales in 2025, but the chip industry is tough to handicap.Then of course there's Intel (NASDAQ:INTC), which is inexplicably getting into the discrete GPU market, even as it continues to let AMD tiptoe onto its CPU turf.Then there's the not-so-small matter of quantifying the impact of the tariff war underway between China and the United States. Never even mind Nvidia's plans to acquire Mellanox Technologies (NASDAQ:MLNX), which are now in question.Making matters more confusing is that not everyone's upset that the deal may be "Dead on Arrival." NVDA Stock Is Getting SqueezedThe push and pull of these headlines has seemingly caused chaos for Nvidia stock, but there's a method to the madness.The chart of Nvidia stock tells the tale. The meltdown of NVDA stock late last year was caused by a combination of marketwide bearish pressure and the realization that the cryptocurrency mining mania was truly over. The revitalization of AMD's graphics card business didn't help either.The sellers seemingly overshot their target, though. Since hitting a multi-month bottom in December, NVDA stock has formed what's essentially a converging wedge pattern. moving sideways, and leading the bulls and the bears into a scenario in which one side or the other is going to have to make a commitment to its stance. Click to EnlargeTheir failure to do so yet certainly makes sense. As was laid out above, investors have a great deal of conflicting data to sift through. The pro and the con arguments both hold water. The bulls almost have a slight edge though.The stock chart shows us two big-time details about Nvidia stock. The chart is bullish, since the green 200-day moving average line is below all the other moving-average lines. And more pressure is being put on the upper boundary of the converging wedge pattern than on the lower boundary.Don't be misled though. A strong market tide in either direction could still easily snap either side of the wedge shape being formed. The Bottom Line on Nvidia StockA move outside of the confines of the converging wedge pattern will likely inspire more headlines that are in sync with the move.That is to say, a break above the upper boundary of the narrowing trading range will result in optimistic commentaries that fan those bullish flames. A break below the floor will likely lead to more pundits expressing doubts about NVDA stock. Reporters and commentators are also quite unclear about what to make of Nvidia stock, and they are looking to the chart for clues too.Whatever's in the cards, after NVDA was squeezed toward the tip of an ever-narrowing trading range for eight months, something's got to give soon.The move will probably be intense.As of this writing, James Brumley held no position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Deeply Discounted Energy Stocks to Buy * 7 Stocks to Buy In a Flat Market * 10 Stocks to Buy to Ride China's Emerging Wealth The post Nvidia Stock Is Close to Forcing a Bull, Bear Showdown appeared first on InvestorPlace.
To be sure, the acquisition by Nvidia (NASDAQ:NVDA) of Mellanox Technologies (NASDAQ:MLNX) isn't a transformative deal for Nvidia stock. The current price of NVDA -- $167 -- suggests a market capitalization just over $100 billion. Nvidia has agreed to pay just under $7 billion for Mellanox.Source: Hairem / Shutterstock.com That said, the acquisition might be more important than the numbers suggest. And it's possible uncertainty surrounding its approval is part of the reason why NVDA stock continues to trade sideways.After all, the Mellanox deal touches on key aspects of the case for -- and against -- Nvidia stock at the moment. Meanwhile, with MLNX stock near a post-acquisition low, the market clearly is pricing in a shrinking chance of approval.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe question for Mellanox stock is whether the potential upside is worth the risk of the deal breaking. The question for Nvidia stock is whether a broken deal at this point would raise more concern -- or could potentially be even good news. Where the Deal Stands NowBack in March, Nvidia won a bidding war for Mellanox. Reports leading up to the announcement suggested that Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC) and Xilinx (NASDAQ:XLNX) all were interested in the Israeli networking provider. * 10 Mid-Cap Stocks to Buy It was Nvidia that was willing to pay the highest price -- and perhaps with good reason. The addition of Mellanox's interconnect portfolio (adapters and switches) gives Nvidia an edge in its datacenter business. The acquisition, as CEO Jensen Huang put it, allowed Nvidia to "double down" in that key end market.At the time that the acquisition was announced, approval seemed assured. The "deal spread" -- the return on MLNX stock assuming the deal closed at the $125 per share acquisition price -- initially was just 6%. That narrowed at one point to as little as 3.4%.It's now near 17%, however -- almost at its widest point ever. Trade war concerns are the primary factor. China blocked the acquisition of NXP Semiconductors (NASDAQ:NXPI) by Qualcomm (NASDAQ:QCOM) last year. It may see the Nvidia-Mellanox deal as another way to score trade war points.MLNX traded around $90 at the beginning of this year before falling amid chip sector concerns and then rising amid takeover speculation. The current price of $107 thus probably suggests the market sees a roughly 50-60% chance of approval at this point, assuming the stock would head back to the $90 level if Nvidia walked away. Again, the interesting question is what that means for NVDA stock at the moment. Does Nvidia Stock Take a Hit From Losing Out on Mellanox?The simplest thesis is that NVDA stock takes a hit if the Mellanox deal falls through. For one, Nvidia, according to its 10-Q, would owe Mellanox a $350 million termination fee.But that fee is relatively insignificant: about 0.34% of the current Nvidia market capitalization. It's the impact to the NVDA "story" that looks much more important.After all, the two big risks to Nvidia stock right now seem to be in datacenter and in sector/macro sentiment. Datacenter demand has slowed notably across the industry so far this year. Nvidia management continues to see a second-half rebound, but clearly investors aren't convinced.Meanwhile, the U.S.-China trade battle has been a negative for chip stocks across the board. Stocks in the sector, including NVDA, INTC and Advanced Micro Devices (NASDAQ:AMD), have been repeatedly rattled by tariff concerns. And the macro concerns amplify the category-specific worries in datacenter: a global recession likely means Nvidia over promises in the second half of FY20, just as it did a year ago with the "crypto bubble".On top of those two risks, a broken deal means management worries start getting a little louder. Nvidia whiffed on crypto last year. It could whiff on datacenter this year. Management insisted on the Q2 conference call last month that the deal would close by the end of the year. If it's wrong again, three big forecasting misses in roughly a year will erode the credibility of Huang and CFO Colette Kress.At the very least, just getting the deal done takes one worry -- even if it's a relatively minor issue -- off the proverbial table. This is a stock where, as I wrote in July, no news probably is good news. Less news probably is as well. Could NVDA Stock Rally Off a Broken Deal?That said, a broken deal certainly isn't fatal to Nvidia stock. The company certainly paid up for Mellanox: Huang called the purchase price "beyond imagination".Meanwhile, as Will Ashworth noted last week, Nvidia has paused its share repurchases until closing. Those investors most bullish on NVDA stock might well prefer the company spend $7 billion (it has a $7.2 billion authorization at the moment) on Nvidia shares, not those of Mellanox.With a previously announced plan for $3 billion in total returns by the end of FY20 (i.e., this January), Nvidia likely would ramp its buybacks rather quickly if and when Chinese regulators blocked the acquisition. And so a broken deal could lead to a short-term dip, followed by a mid-term gain as buy-the-dip investors and Nvidia itself step in. Too Much NoiseAgain, the Mellanox deal on its own isn't going to make or break NVDA stock. But it matters. It matters to the story. It matters to the fundamentals, as Nvidia projected the deal to be accretive to earnings-per-share and free cash flow.And it might be at this point, given the volatility in Nvidia stock, that a resolution of any kind can help. This, after all, is a stock that less than a year ago was nearing $300, and a seemingly bulletproof growth story. * 7 Stocks to Buy In a Flat Market Since then, there has been so much noise. The crypto hangover arrived. Trade war speculation has continued ad nauseam. Datacenter has slowed. And NVDA as a result has been bouncing around for almost ten months now.For the stock to rally, any kind of certainty would help. And so it's possible that news on Mellanox -- whether positive or negative -- on its own could be a boost to Nvidia stock.As of this writing, Vince Martin did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Best Tech Stocks to Buy Right Now * 10 Mid-Cap Stocks to Buy * 8 Precious Metals Stocks to Mine For The post What the Suddenly Shaky Mellanox Deal Means for Nvidia Stock appeared first on InvestorPlace.
Over the past two years, I've been conflicted about Nvidia (NASDAQ:NVDA) buying back its stock. At times, Nvidia stock has appeared incredibly overvalued, while at other times, like right now, it seems pretty darn cheap. Source: Hairem / Shutterstock.com The company has said that it won't make any more share repurchases of NVDA stock until it closes its acquisition of Mellanox Technologies (NASDAQ:MLNX), which is expected by the end of this calendar year. As a result, it might not turn on the buyback machine until sometime in fiscal 2021, most likely in the spring. I believe that's a mistake. Here's why. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Nvidia's ValuationAlthough Nvidia stock, including dividends, is up 21.1% year to date through August 28, it is down 41.0% for the past 52 weeks. It currently is trading 34% from its 52-week low of $124.46 and 43% from its 52-week high of $292.76. That's 20% below its midpoint of $208. * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off In my eyes, that makes NVDA stock cheaper than it's been in some time. That said, from a financial metrics standpoint, its current valuation might appear expensive. Nvidia's price-to-sales ratio (9.8x vs. the five-year average of 8.3x) and price-to-cash flow ratio (32.8x vs. the 5-year average of 29.8x) are both higher than their historical average. However, its free cash flow for the trailing 12 months is $2.45 billion, $500 million higher than its five-year average. Nvidia's current enterprise value is $92.3 billion, which translates into a free cash flow yield of 2.7%. Now, if you consider its free cash flow yield from last September when it hit its all-time high of $292.76, Nvidia's FCF yield would have been 1.8% based on free cash flow of $3.14 billion and an enterprise value of $173.0 billion [610 million shares multiplied by $292.76 plus $2.0 billion debt less $7.6 billion in cash and marketable securities] .From a free cash flow perspective, Nvidia stock appears slightly cheaper despite the slight erosion of free cash flow, which brings me to it buying back its stock. Nvidia's Got a HistoryWhen Nvidia released its Q3 2019 results last November, it announced that it would return an additional $3 billion to shareholders by the end of fiscal 2020. In the fourth quarter of fiscal 2019, Nvidia repurchased $700 million of its shares, as part of the $3 billion it promised to return to shareholders. The company paid $134.51 on average per share for those shares. The midpoint between the high ($222.0) and low ($124.46) during those three months was $173.23, considerably higher than the price it paid to repurchase its shares.Nvidia did an excellent job buying back its shares in the fourth quarter. And then Nvidia bought Mellanox, and the share repurchases ended. Under its plan to return $3 billion to shareholders in fiscal 2020, it still has $2.1 billion in dividends and share repurchases to make between now and the end of January. Since it won't do any more share repurchases until the Mellanox deal closes, it will have $1.9 billion in share repurchases to make in Q1 2021. I sure hope it doesn't buy them all at once. It would likely overpay if forced to buy at any price. Given its history, I assume it would wait for a better time and not force the issue. The Bottom Line on Nvidia StockSince Nvidia's board authorized the repurchase of its stock in August 2004, Nvidia's bought back 260 million of its shares at an average price of $27.23 a share, delivering a 510% return on its investment. At the end of the second quarter, the board authorized the repurchase of $7.24 billion in stock between now and December 2022. Nvidia's had success repurchasing its stock over the years; shareholders ought to hope it gets back to buying its stock as soon as possible. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off * 7 'Strong Buy' Stocks to Beat Volatility * 7 Mega-Cap Tech Stocks on a Rebound Now The post A Massive Buyback Is Just the Thing to Improve Nvidia Stock appeared first on InvestorPlace.
Mellanox's (MLNX) latest SmartNIC and BlueField offerings are aimed at enabling data centers to enhance performance, efficiency and security capabilities.
Nvidia Corp (NASDAQ:NVDA) the giant $91 billion market cap gaming chip maker, reported second-quarter earnings that signal the importance of artificial intelligence (AI) for its future. Its latest results show AI is leading its turnaround.Source: michelmond / Shutterstock.com NVDA's new gaming RTX chips use AI to simulate light (called "ray tracing"). Its hyperscale data center clients are increasingly buying Nvidia chips to enable their AI conversation and training bots. Nvidia is also leading in the autonomous vehicle market which need AI chips.The Q2 earnings which Nvidia reported on Aug. 15 showed a marked turnaround. On the follow-up call, NVDA's CEO highlighted the how AI is powering Nvidia's growth in these markets.InvestorPlace - Stock Market News, Stock Advice & Trading TipsNVDA reported Q2 sales of $2,579 million, down 17.4% from the prior year, but up 16.1% from $2.22 billion reported in Q1 2019. NVDA's Q3 sales guidance was $2.9 billion, plus or minus 2%. * 10 Stocks to Own Through a Global Recession NVDA is now back on a growth path. Three months ago Nvidia stock was trading for $169 per share when it reported Q1 earnings. Today the Nvidia stock price is trading for $156.83 after hours. The market is starting to believe in the turnaround.Downturn EndedNvidia sources most of its manufacturing in Taiwan. So it is not directly affected by Chinese chip suppliers, the China yuan devaluation, and the U.S. China trade war. However, it is facing competition from Chinese data centers which buy chips elsewhere.In May Nvidia's CEO, Jensen Huang, told CNBC that "there was no question in my mind that the spending pause has ended" in their portion of the chip market. NVDA's figures today clearly showed this improvement.Gross MarginsAnalysts focus on Nvidia's gross margins as a bellwether of its financial health. In Q1 NVDA reported lows of 59.0%, and this quarter it hit 60.5%, both on a non-GAAP basis. NVDA's outlook for Q3 is for 62 to 62.5%, plus or minus 0.50%. Take a look at this chart taken from the Nvidia CFO's Commentary on Aug. 15, 2019:The reason this is important can be seen using the guidance for Q3. With sales at $2.9 billion next quarter, $765 million in operating expenses and $25 million in other income, with a tax rate of 10%, the estimated earnings per share next quarter will be $1.59, up 28.5% on the quarter: Bargain at This PriceOn an annualized run rate basis for the next 12 months full year earnings will be $6.37 per share. The earnings are also likely to incrementally increase 10 to 15% for each quarter as the turnaround grows each quarter. That implies a 12 month forward EPS of $7.40 to $7.96. At this price the implied price-to-earnings ratio is between 20 and 21x.Analysts covered by Yahoo! Finance have the stock trading at a forward P/E ratio of 20x, so this is in line with those analysts. At this price, the stock looks like a reasonable bargain. Nvidia Is Full of CashNVDA has $8.475 billion in cash, no debt and is free cash flow positive. Its latest Q2 filings showed that free cash flow was $823 million for the quarter, and this represented 89% of its net income of $923 million. I estimated that NVDA will have accumulated $10.7 billion in cash by the end of the year. NVDA has suspended its share buybacks until then.NVDA agreed to buy Mellanox Technologies (NASDAQ:MLNX) for $6.9 billion in cash, including debt. This should close by year end 2019. I estimate that NVDA will still have over $3.8 billion left over after the deal closes. NVDA plans to then restart buybacks. Bottom Line on Nvidia StockNvidia's business is now showing clear signs of a turnaround. Demand for its AI chips in gaming and data centers is rising. It is generating free cash flow each quarter, and will be accumulating cash up to year-end when it buys Mellanox. At this price, Nividia stock has a low P/E ratio. It is probably a good time to jump back in on Nvidia stock.As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy on the Dip * 7 Marijuana Stocks With Critical Levels to Watch * 7 Internet of Things Stocks to Buy Now The post Artificial Intelligence Is Key to Nvidia Stock's Turnaround appeared first on InvestorPlace.
Recessions in the semiconductor industry hearken back to the days before computing. They're inventory recessions. Supply exceeds demand, so production slows while supply is worked off. Once inventory comes back into balance, prices rise and supply resumes.Source: Hairem / Shutterstock.com The latest results from Nvidia (NASDAQ:NVDA) indicate the latest chip recession, which began a year ago, is already easing. Net income of $552 million, 90 cents per share was down by half from what it was then. But revenue of $2.58 billion was up 16% from the previous quarter.This put some wind back beneath the wings of the stock. It shot up $10 per share almost immediately. With the stock market roaring back, Nvidia opened Aug. 19 up another $5, at $164.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Smart Money BuyingBut the smart money was already in. So was I. I picked up 100 shares for my retirement account in May, so after a bumpy ride (it has since been as low as $132) I'm in the money. * 7 Safe Dividend Stocks for Investors to Buy Right Now I have also recommended the shares twice since the start of July. First I recommended it for those who look good in leather jackets, like Nvidia CEO Jensen Huang. More recently I have counseled patience, calling it an essential long-term holding.Over the next 5-10 years the future for Nvidia looks so bright you need to wear shades.Nvidia is the leader in computer graphics as even Microsoft (NASDAQ:MSFT) acknowledged in using it for its video game Minecraft. NVDA's only cloud rival in data center graphics is Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), so cloud companies that want to keep up almost have to buy its silicon.The same technology that makes computer games pretty and brings in the Bitcoin is essential to delivering artificial intelligence from clouds. Even if Advanced Micro Devices (NASDAQ:AMD) increases its share of an Nvidia market, Nvidia will prosper.The data center business will be further fortified by the pending acquisition of Mellanox (NASDAQ:MLNX), whose internal communications fabric gives Nvidia a more complete solution for cloud builders. Nvidia has already announced a "cloud in a box" to bring new applications to the network edge, to factories and office buildings. What AI Means for NvidiaWith Nvidia, artificial intelligence means computers can respond easily to natural language requests, making more applications self-service. In his conference call after the earnings announcement Huang said over 4,000 AI startups are now working with his company. Graphics chips are getting better at recognizing objects, bringing self-driving cars, trucks and buses closer.The point is that AI isn't just a cloud thing. It's also an edge thing. Building intelligence into factories and cities, not just for maintenance but for regular operations, will be the next leg in demand. Chips for those applications are about to be released.As a demonstration of what is possible, Nvidia is delivering Jetson Nano, a small-scale development kit with both hardware and software. These kits are available online for as little as $100 and by 2025, machine learning will be a $40 billion market. The Bottom Line on NVDA StockEven if there's a general recession ahead, technology is the first industry out of it. Office jobs that disappeared in the 2001 recession did not come back. Neither did the sales jobs that disappeared in the 2008 recession. It's hard to tell which jobs will disappear this time, but at minimum there will be fewer operators standing by.When automation becomes a survival strategy, Nvidia will be a good stock to be in. Since the bottom of the last recession NVDA stock is up 1,200%. More good times are ahead.Dana Blankenhorn is a financial and technology journalist. He is the author of the environmental story, Bridget O'Flynn and the Bear, available at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in NVDA and MSFT. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Dividend Stocks to Load Up On * The 10 Biggest Losers from Q2 Earnings * 5 Dependable Dividend Stocks to Buy The post Nvidia Stock Will Survive the Chip Recession appeared first on InvestorPlace.
Nvidia’s stock went from unstoppable to nearly uninvestable in the matter of a few weeks last year and has not recovered. The sudden drop in Nvidia’s (NVDA) stock price and a competitive ecosystem that’s hard to understand are two reasons the chipmaker has scared away growth investors, who have opted for momentum bets such as cloud-software companies. The fact that semiconductor companies are cyclical, and mired in the U.S.-China trade war, has further overshadowed Nvidia’s growth potential.
After reporting 760% EPS growth last quarter, Big Data stock Inphi is set to report Q2 earnings. Is the highly ranked chip stock ready to rise or retreat?
ANSYS' (ANSS) second-quarter earnings are likely to benefit from growing clout of company's software simulation solutions in the automotive end-market.
It's been a wild few months for shares of Qualcomm (NASDAQ:QCOM), as the global chip giant has found itself in the middle of a lot of noise - ranging from corporate deals, to legislation, to geopolitical tensions - the sum of which has slung Qualcomm stock from $50, to $90, back to $65, and up to $75.Some of that noise has been very positive for QCOM stock. Qualcomm recently signed a huge deal with Apple (NASDAQ:AAPL) wherein Apple licensing revenue will come back into the Qualcomm ecosystem for the next several years. Some of it has been negative. The FTC recently ruled that Qualcomm's licensing agreements violated antitrust law, and need to be renegotiated.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut, if you zoom out, the fundamentals underlying Qualcomm stock are favorable. In the big picture:* Global semiconductor market fundamentals are starting to improve.* Qualcomm's standing in that market is likewise improving thanks to the landmark Apple deal.* Recent developments with respect to Qualcomm's licensing business imply that Qualcomm won't see any hit on its licensing business anytime soon.* Qualcomm stock is still pretty cheap relative to its now very big near term growth prospects. * 7 Oversold Stocks To Buy Right Now Net net, then, Qualcomm stock - which is already up more than 30% year-to-date - should stay in rally mode for the foreseeable future. Global Semiconductor Market Fundamentals Are ImprovingThe global semiconductor market has been in free fall in 2019 as rising geopolitical tensions and economic uncertainty have weighed on global demand, against the backdrop of sky-high inventory levels, resulting in depressed sales and margin figures for semiconductor players like Qualcomm.But, the market is finally starting to show signs of life. While still down big year-over-year, global semiconductor sales improved month-over-month in May for the first time in several months, including a month-over-month gain in the all-important Americas and China markets.Further, Texas Instruments (NASDAQ:TXN) recently reported Q2 revenue and profit beats as operations improved sequentially. Teradyne (NASDAQ:TER) also reported Q2 revenue and profit beats amid strong 5G and networking demand. Mellanox (NASDAQ:MLNX) topped Q2 revenue estimates as the company reported sustained strong cloud and AI demand. Intel (NASDAQ:INTC) reported strong Q2 numbers, too.Net net, global semiconductor market fundamentals are stabilizing and improving, and this dynamic provides an increasingly favorable backdrop for QCOM stock. Qualcomm's Competitive Positioning Is ImprovingImportantly, Qualcomm's competitive positioning in the soon-to-be resurgent global semiconductor market is improving.This comes back to the fact that Apple is once again a Qualcomm customer. For several years, Apple was one of Qualcomm's biggest and most important customers. Then, the two started arguing over licensing agreements and royalty fees. Apple stopped paying the disputed licensing fees.In April, though, the two companies came to a deal. They dropped all litigation, Apple paid Qualcomm a huge lump sum fee for missed payments, and the two agreed to a multi-year partnership wherein Apple has essentially been locked in as a Qualcomm customer into 2025.That's big news for two reasons. First, it means one of Qualcomm's biggest and most important customers is back, and locked in for the next several years. Two, it means Qualcomm should get a huge boost when Apple launches its 5G phone next year.Broadly, thanks to the Apple deal, Qualcomm's profit growth outlook over the next several years is quite favorable. Qualcomm's Licensing Business Won't Get Hit Anytime SoonOne of the biggest risks to the QCOM growth narrative has been the concern that Qualcomm's licensing business will take a big hit over the next few years as the government forces Qualcomm to renegotiate such deals on less favorable terms.This concern was birthed out of an FTC ruling which found that Qualcomm's licensing practices violated antitrust law. But, since then, the U.S. Justice Department has requested that the enforcement of this antitrust ruling be put on pause.Citing support from the Energy Department and Defense Department, the DoJ basically stated that the ruling was incorrect and that disrupting a company as important to the nation's energy and defense services as Qualcomm would have broadly adverse implications.The DoJ's request for a pause here certainly isn't the last chapter in this book. But, it does imply that over the next few chapters, no hammer will be brought down upon Qualcomm, meaning that the company's mobile licensing business should remain healthy for the foreseeable future. Qualcomm Stock Has Valuation UpsideGiven the company's robust profit growth potential over the next few years, QCOM stock seems slightly undervalued at current prices.Qualcomm's depressed revenue and profit trends will improve in the back-half of 2019 thanks to renewed Apple revenue. In 2020 and 2021, Qualcomm's revenue and profits will get another big boost thanks to the widespread roll-out of 5G coverage and 5G smartphones. Thus, between now and 2021, Qualcomm's revenue and profits stand to rise by a lot.According to YCharts, the consensus revenue estimate for fiscal 2021 is $28.4 billion, up 25% from last year's $22.7 billion revenue base. The consensus EPS estimate for fiscal 2021 is $6.80, up 85% from last year's $3.60 EPS base.Thus, when contextualized with the fact that EPS is expected to nearly double over the next few years, QCOM stock's elevated forward earnings multiple of 20 makes sense.If you apply this stock's historically average 13-times forward multiple to the fiscal 2021 projected EPS base of $6.80, you arrive at a fiscal 2020 price target of over $88. Discounted back by 7% (three points below 10% to account for the 3% yield), which equates to a fiscal 2019 price target of just under $83. Bottom Line on Qualcomm StockThere has been a lot of noise surrounding QCOM stock over the past several months. But, zooming out, the core fundamentals underlying this stock are favorable, and project to remain favorable for the foreseeable future. All things considered, then, Qualcomm stock has fundamentally supported runway to prices above $80 over the next few months.As of this writing, Luke Lango was long QCOM and INTC. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Oversold Stocks To Buy Right Now * 7 Stocks to Buy Upgraded by Wall Street * 7 Marijuana Stocks With Critical Levels to Watch The post Four Big Reasons Why Qualcomm Stock Can Stay in Rally Mode appeared first on InvestorPlace.
Shares of GPU giant Nvidia (NASDAQ:NVDA) have been on a roller coaster ride over the past year. A year ago, Nivida stock was an untouchable AI stock closing in on $300.Source: Shutterstock At the end of 2018, though, Nivida plummeted to $130 on global semiconductor market meltdown concerns. Those concerns eased in early 2019. NVDA stock shot up to $190 by April. Then, by June, it had dropped to $130 again as semi market meltdown concerns came back to the forefront. They have since eased, and Nvidia stock has rebounded to $170.Net net, over the past 12 months, the Nvidia stock price has traveled from $300, to $130, to $190, back to $130, and up to $170.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Stocks to Sell This Summer Earnings Season That's a wild ride. But, I think this wild ride is set to end soon. Specifically, I think global semiconductor market fundamentals are showing signs of stabilizing and improving. As those fundamentals do stabilize and improve, NVDA stock should similarly stabilize into a more normal medium to long term uptrend.That's why I'm bullish on NVDA stock here. I've reiterated time and time again that late 2018 and early 2019 weakness in the stock was a byproduct of temporary market weakness. That market weakness is now passing. Taking its place will be longer-running secular tailwinds.Ultimately, those secular tailwinds create a visible pathway for NVDA stock to climb back towards $300 in the long run. Market Fundamentals Are ImprovingThe bull thesis on NVDA stock is that the company's core fundamentals are finally starting to improve, after a multi-quarter stretch of temporary but ugly turbulence.The semiconductor market has been hit hard over the past few quarters. There have been a few things at play here, including sky-high inventory levels, weak demand in the face of go-forward economic uncertainty, and rising geopolitical tensions. Nvidia has not been exempt from these headwinds. Over the past few quarters, the company's revenues, margins, and profits have been in free fall.But, the semiconductor market is showing early signs of bottoming out and turning around. From a macro perspective, global semiconductor sales improved month-over-month in May. While still down big year-over-year this was the first time that has happened in several months, including a month-over-month gain in the all-important Americas and China markets.Further, the forecast calls for a 2019 year-over-year sales decline of 12% (less than the first quarter's 13% drop), and a 2020 year-over-year sales gain of over 5%.Broadly, then, global semiconductor sales trends are finally turning a corner, and are expected to improve into the back half of 2019 and 2020.The microdata confirms this macro outlook. Texas Instruments (NASDAQ:TXN) recently reported Q2 revenue and profit beats as operations improved sequentially. Teradyne (NASDAQ:TER) also reported Q2 revenue and profit beats amid strong 5G and networking demand. Mellanox (NASDAQ:MLNX) topped Q2 revenue estimates as the company reported sustained strong cloud and AI demand. Intel (NASDAQ:INTC) reported strong Q2 numbers, too.Net net, global semiconductor market fundamentals are stabilizing and improving, and this dynamic should power NVDA stock higher for the foreseeable future. Nvidia Stock Has Runway HereThe valuation underlying NVDA stock, coupled with this company's robust long term profit growth potential through numerous AI and data verticals, implies that at $170, the stock has a lot of long term upside potential.Nvidia has broad exposure to all of tomorrow's most important markets. The company is a big player in the hyperscale data-center space. They are also the leaders when it comes to supplying chips for machine learning, AI, self-driving, cloud gaming, augmented reality, and much, much more.All of those markets have huge growth potential in the long run. The company also has very little price competition in those markets, implying that margins have room to move higher in the long haul. Consequently, Nvidia should continue to fire off double-digit revenue and profit growth rates over the next few years.Nvidia stock trades at 32-times forward earnings. Sure, that's a big multiple for a semiconductor stock (the average forward earnings multiple in this space is 16). But, the average long term projected earnings growth rate across the semiconductor space is 11%. For Nvidia, it's 15%, according to YCharts.Indeed, my modeling suggests that $13 in EPS is achievable for Nvidia by 2025, assuming double-digit revenue growth and steady margin expansion. Based on a growth-average 20 forward multiple, that yields a long term price target for NVDA stock $260. Bottom Line on Nvidia StockNvidia stock has undergone immense turbulence over the past year, mostly due to immense turbulence in the global semiconductor market. But, fundamentals in that market are starting to stabilize and improve. As they continue to do so over the next few months, NVDA stock should move higher with less volatility.As of this writing, Luke Lango was long NVDA and INTC. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 5G Stocks to Connect Your Portfolio To * 7 Stocks to Sell This Summer Earnings Season * 6 Upcoming IPOs for July The post It Looks Like Nvidia Stock Is Shaking out of its Downturn appeared first on InvestorPlace.