On Thursday, Mizuho (NYSE:MFG) maintained an Outperform rating on NVIDIA (NASDAQ: NVDA) and increased the price target to $175 from the previous $165. This adjustment follows NVIDIA's robust October quarter earnings report, which surpassed expectations with revenues of $35.1 billion against the consensus estimate of $30 billion. The company's guidance for the January quarter is set at $37.5 billion, aligning with consensus estimates but falling short of the buy-side expectations of over $39 billion.
The financial institution highlighted several key performance indicators from NVIDIA's report. Notably, data center revenues climbed to approximately $30.8 billion, marking a 17% quarter-over-quarter increase and a substantial 112% rise year-over-year. Additionally, enterprise artificial intelligence revenues have surged more than threefold from the previous year, bolstered by NVIDIA's NIM and NeMo technologies that enhance inference performance and model quality through improved inference time scaling.
Mizuho also pointed out that while the January quarter is seeing strong ramps in Blackwell/GB200 products, this is expected to place pressure on margins, albeit driving an incremental $2-3 billion in data center revenue after six consecutive quarters of around $4 billion plus. Looking forward, the firm anticipates continued strength into calendar year 2025, with NVIDIA's NVL racks expected to drive average selling prices higher.
Despite a 15% quarter-over-quarter decline in October quarter networking revenues due to a higher mix of Spectrum-X products, demand for NVIDIA's GB200 NVL36/72 racks is projected to outstrip supply into fiscal year 2026. Based on these observations, Mizuho reiterated its Outperform rating and raised its estimates and price target for NVIDIA, naming the company as its top pick for 2024 in the AI accelerator market, which is forecasted to grow at a compound annual growth rate of more than 60% from 2023 to 2027.
In other recent news, NVIDIA Corporation (NASDAQ:NVDA) has reported a record-breaking quarter, with total revenue reaching $35.1 billion. This marks a 94% increase from the previous year, largely driven by the robust demand for AI infrastructure. The company's recent developments include the successful launch of the NVIDIA Hopper and the Blackwell architectures. Analysts note that NVIDIA's financial success is attributed to the burgeoning AI industry and the company's significant role in the transition towards machine learning and AI.
The company's data center revenue hit $30.8 billion, up 112% from the previous year, indicating strong demand for AI infrastructure. The Blackwell architecture is now in full production, with significant interest from cloud service providers. NVIDIA's CEO, Jensen Huang, emphasized the company's pivotal role in the establishment of AI as an industry.
Looking ahead, NVIDIA projects a Q4 revenue of $37.5 billion and anticipates a moderation of gross margins to the low 70s during the Blackwell product ramp. While the company anticipates a temporary dip in gross margins, it expects to return to mid-70s margins shortly.
InvestingPro Insights
NVIDIA's stellar performance, as highlighted in Mizuho's analysis, is further reinforced by real-time data from InvestingPro. The company's market capitalization stands at an impressive $3.56 trillion, reflecting its dominant position in the semiconductor industry. NVIDIA's revenue growth is particularly noteworthy, with a staggering 194.69% increase over the last twelve months, aligning with Mizuho's observations on the company's robust financial performance.
InvestingPro Tips underscore NVIDIA's strong market position. The company has maintained dividend payments for 13 consecutive years, demonstrating financial stability. Additionally, NVIDIA boasts a perfect Piotroski Score of 9, indicating excellent financial health and potential for future growth. This aligns with Mizuho's optimistic outlook for the company's performance in the AI accelerator market.
For investors seeking a deeper understanding of NVIDIA's potential, InvestingPro offers 22 additional tips, providing a comprehensive analysis of the company's financial health and market position.
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