By Senad Karaahmetovic
BofA analyst Vivek Arya has warned clients about the risk to Nvidia's (NASDAQ:NVDA) current FQ2 outlook.
Several headwinds, such as recent price cuts of its high-end cards, China lockdowns, Europe turmoil and Ethereum’s move to proof-of-stake, are likely to weigh on the company’s results and guidance.
“Price cuts on Ampere cards could be used to clear inventory ahead of Lovelace 40xx launch, but concerns remain regarding a macro slowdown weighing on demand. Gaming is 44% of NVDA sales and our checks suggest average price of several Ampere cards continues to decline to below MSRP in certain cases,” Arya wrote in a client note.
On a more positive note, the analyst sees “less risk” to Nvidia’s data center business after strong results from TSMC.
Overall, the analyst remains Buy-rated on NVDA shares with a $220 per share price target.
“We size the impact of n-t headwinds, but maintain Buy on NVDA since we think a potential estimate reset could clear the decks for a solid CY23 for one of the most innovative companies in the sector with its new 5nm pipeline (Hopper, Lovelace, Grace),” Arya concluded.