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NVIDIA Corp - Stock Quote NVDA

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Morningstar's NVIDIA Corp Stock Analysis

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Demand Headwinds Finally Catch Up to Nvidia; Shares Look Attractive Relative to Unchanged $200 FVE

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

Wide-moat Nvidia reported first-quarter results that came in ahead of our expectations. Gaming and data center segments remained the primary growth drivers. However, management noted second-quarter revenue will be negatively affected by $500 million to account for COVID-19 lockdowns in China and the stopping of sales to Russia. Amidst the broader technology sector selloff, shares of Nvidia are down 44% year-to-date, and now trade at a discount to our unchanged fair value estimate of $200 per share. Gaming revenue is expected to decline sequentially in the second quarter, as: demand softens in Europe (related to the war in Ukraine) and China (as a result of lockdowns); channel inventory has nearly normalized; and the firm transitions to a new GPU architecture. We note this is consistent with our growth assumptions for the gaming segment this year. Despite near-term headwinds, we view Nvidia as our top fabless semiconductor pick, as we think the firm’s data center business will prove resilient to macroeconomic headwinds.

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NVIDIA Corp's Company Profile

Business Description

Nvidia is the top designer of discrete graphics processing units that enhance the experience on computing platforms. The firm's chips are used in a variety of end markets, including high-end PCs for gaming, data centers, and automotive infotainment systems. In recent years, the firm has broadened its focus from traditional PC graphics applications such as gaming to more complex and favorable opportunities, including artificial intelligence and autonomous driving, which leverage the high-performance capabilities of the firm's products.

2788 San Tomas Expressway
Santa Clara, CA, 95051
T +1 408 486-2000
Industry Semiconductors
Most Recent Earnings Apr 30, 2022
Fiscal Year End Jan 29, 2023
Stock Type Cyclical
Employees 22,473