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Should You Buy Nvidia Stock after Its Q4 Results?

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Nvidia (NASDAQ:NVDA) stock is trending upward in today’s pre-market trading session. The stock rose by about 6.49% at 8:06 AM ET. On Thursday, the company announced its earnings for the fourth quarter of fiscal 2020 (quarter ended on January 26) after the market close. In the fourth quarter, the company reported revenues of $3.11 billion—up 40.8% YoY (year-over-year). Nvidia reported an adjusted EPS of $1.89—up 136.3% YoY. Notably, Wall Street analysts expected the company to post a non-GAAP EPS of $1.67 on total revenues of $2.97 billion.

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Nvidia’s Q4 earnings results

The sales from Nvidia’s data center segment rose 33.3% sequentially and 42.6% YoY to $968 million. However, the data center segment’s sales missed analysts’ consensus estimate of $825.8 million. The revenues from the gaming segment fell 10.1% sequentially but rose 56.3% YoY to $1.49 billion. The gaming segment’s revenues missed analysts’ consensus estimate of $1.52 billion.

In the first quarter of fiscal 2021, Nvidia expects revenues of $3.00 billion plus or minus 2%. The company reduced its sales outlook for the first quarter by $100 million due to the COVID-19 coronavirus outbreak. Wall Street analysts expect the company to see sales of $2.89 billion. However, the revenue outlook doesn’t include the impact of the pending acquisition of the Mellanox deal.

During the fourth-quarter conference call with investors, Nvidia CFO Colette Kress said, “it’s still too early to foresee the impact from COVID-19 but the figure was calculated by splitting supply challenges and overall demand against both gaming and data-center sales. China accounts for about 30% of gaming sales and the outbreak could depress gaming sales by low double-digits sequentially,” according to MarketWatch. She also said, “While data-center sales from China tend to vary from quarter to quarter and are more difficult to determine.”

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Analysts increased the target price

Many analysts increased their target price for Nvidia stock after the fourth-quarter earnings results.

  • Evercore ISI increased its target price from $300 to $345.
  • J.P. Morgan increased its target price from $237 to $305.
  • RBC increased its target price from $301 to $350.
  • Jefferies increased its target price from $315 to $330.
  • Piper Sandler increased its target price from $275 to $330.
  • Rosenblatt Securities increased its target price from $240 to $315.
  • Citigroup increased its target price from $245 to $315.
  • Instinet increased its target price from $200 to $235.
  • Wells Fargo increased its target price from $290 to $320.
  • Susquehanna increased its target price from $310 to $330.
  • Benchmark increased its target price from $275 to $320.
  • Cowen and Company increased its target price from $240 to $325.
  • Mizuho increased its target price from $270 to $295.
  • BMO increased its target price from $250 to $285.
  • Deutsche Bank increased its target price from $220 to $265.
  • Suntrust Robinson increased its target price from $314 to $325.
  • Raymond James increased its target price from $240 to $300.
  • Craig-Hallum increased its target price from $300 to $325.

Nvidia is covered by 41 Wall Street analysts. Among the analysts, 30 recommend a “buy,” nine recommend a “hold,” and two recommend a “sell.” Analysts’ mean target price on the stock is $279.15, which implies a 3.1% gain from the current level of $270.78.

Peer comparison

In the fourth quarter, Advanced Micro Devices (NYSE:AMD) reported sales of $2.13 billion—up 49.9% YoY. The company reported an adjusted EPS of $0.32—up 300% YoY. Notably, analysts expected the company to post an adjusted EPS of $0.31 on total revenues of $2.11 billion. To learn more about AMD’s fourth-quarter earnings, read AMD Stock Fell Due to Disappointing Guidance.

In the fourth quarter, Intel (NASDAQ:INTC) reported sales of $20.21 billion—up 8.3% YoY. The company reported an adjusted EPS of $1.52—up 18.8% YoY. Analysts expected the company to post an adjusted EPS of $1.25 on total revenues of $19.2 billion. To learn more about Intel’s fourth-quarter earnings, read Why Intel Stock Could Rise on Q4 Earnings Beat.

Nvidia’s stock performance

Nvidia stock has risen close to 14.53% since the beginning of February. On Thursday, the stock closed at $270.78, which was 0.65% lower than its previous closing price, 0.99% lower than its 52-week high of $273.48, and 104.2% higher than its 52-week low of $132.60. The company’s market cap is $165.7 billion.

Based on Nvidia’s closing price on Thursday, it has reported returns of 6.5% in the last five trading days, 7.5% in the trailing one-month period, and 77.1% in the trailing 12-month period. The company has gained 15.1% since the beginning of 2020.

On Thursday, Nvidia closed 7.6% above its 20-day moving average of $251.69 and 13.1% above its 50-day moving average of $239.35. The company was also trading 24.1% above its 100-day moving average of $218.24.

Nvidia’s 14-day MACD is 17.96, which suggests an upward trading pattern. The semiconductor company’s 14-day relative strength index score of 69 indicates that the stock is nearing the overbought zone.

Intel and AMD have gained 12.7% and 18.9%, respectively, year-to-date.

Read Nvidia’s Q4 Earnings: Will Optimism Prevail? to learn more.

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