Thursday, December 27, 2018

"Nvidia Slips on RBC Price-Target Cut" (NVDA)

It might be time for NVIDIA to start thinking about buying some young upstart chip designers.
Starting in May  2015 with the stock bouncing around $21 we were pretty rah-rah on the deal, eventually leading off each post with something like this from May 2016:
We are fans.
Before we go any further, our NVIDIA boilerplate: we make very few calls on individual names on the blog but this one is special.

They are positioned to be the brains in autonomous vehicles, they will drive virtual reality should it ever catch on, the current businesses include gaming graphics, deep learning/artificial intelligence, and supercharging the world's fastest supercomputers including what will be the world's fastest at Oak Ridge next year.
Not just another pretty face.

Or food delivery app.

After hours the stock is changing hands at $38.31 up 7.70% which, if it holds through tomorrow's regular session, beats the old highs from 2007....
Then in March 2017 we noted:
...We focus on the stock, not the company. The company should be fine for at least the next couple years until the artificial intelligence biz catches up to NVIDIA and either takes a different approach or a really different approach and goes quantum computer....
Well, we're approaching that two-year mark and the competition is coming on and the stock knew it back in September as it made the first peak of the double top that culminated in that second high at $292.76:

What I'm saying is: We know this one fairly well and are starting, depending on R&D or acquisitions, starting to get interested again.

$127.01 last, down $6.09 (-4.58%)

And here's the latest from The Street:
Shares of Nvidia slipped Thursday morning after RBC Capital lowered its price target on the graphics chip maker's stock to $200 per share from $230.

Shares of Nvidia Corp. (NVDA - Get Report) slipped 3.44% to $128.52 Thursday morning after RBC Capital lowered its price target on the graphics chip maker's stock to $200 per share from $230.
Analyst Mitch Steves said in a note to investors that average selling prices have been coming down in secondary markets. RBC still rates the stock "outperform."

Steves wrote that ASPs have decreased over the past month, which he thinks is due to additional secondary market sales. Focusing on Nvidia's GTX gaming graphics processing unit, Steves said "as this is a gaming chip, Nvidia is unlikely able to discern if sales are for pure gaming purposes or crypto currency mining."

"When we look at the price trends, we notice a slight downward move that aligns with our belief that sales could be a bit more muted in the month of December," Steves said. "While this is likely a near-term issue and doesn't impact the long-term story, we think it is prudent to remain conservative for next quarter."

Steves said Nvidia recently ramped up its efforts within the automotive segment.
"Beyond the addition of sensors and connected devices," Steves said, "we note that display technology should also increase in the future, which creates the need for more computing power...MORE
What the analyst doesn't mention is the data center business which, if our crystal ball is showing the right picture, will really start ramping about a year from now.
Which reminds me, there's a company I should introduce to Mr. Huang.