"Demand continues to outpace supply": Here's what 3 Wall Street analysts are saying about Nvidia's 2nd quarter earnings results

Nvidia CEO Jensen Huang

Mandel Ngan/AFP via Getty Images

• Nvidia's second-quarter earnings report revealed continue growth that surpassed analyst estimates.
• The graphics card manufacturer said revenue grew 68% to a record $6.51 billion.
• Here's what 3 Wall Street analysts had to say about Nvidia's second-quarter earnings report.
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Shares of Nvidia jumped as much as 2% on Thursday after the computing company released record second-quarter earnings results that surpassed analyst estimates.

The company saw continued strength in its gaming, data center, and professional visualization businesses, each helping drive year-over-year revenue growth of 68%.

Here were the key numbers:

Revenue: $6.51 billion, versus estimates of $6.34 billion
Adjusted earnings per share: $1.04, versus estimates of $1.02
Third quarter outlook: $6.80 billion, versus estimates of $6.53 billion

On the crypto front, Nvidia said it expects a decline in the sale of its crypto mining processors, especially as ethereum transitions to EIP-3554, which will make the cryptocurrency essentially unmineable. The company also said it expects the ongoing chip shortage to last well into 2022.

Nvidia said it continues to work through the regulatory process for completing its proposed acquisition of Arm.

"Although some Arm licensees have expressed concerns or objected to the transaction, and discussions with regulators are taking longer than initially thought, we are confident in the deal and that regulators should recognize the benefits of the acquisition to Arm, its licensees, and the industry," Nvidia CFO Colette Kress said.

Here's what 3 Wall Street analysts had to say about Nvidia's second-quarter earnings report.

Bank of America: "Demand continues to outpace supply."

"We believe the call eased concerns around two key overhangs: (1) data center has decelerated the last 4 qtrs however, lion's share of growth will be driven by data center, suggesting reacceleration to 40% YoY growth from 35% in Q3; (2) gaming demand solid as only 20% of gamers have adopted ray-tracing technology which has 50-70% higher ASP and everexpanding traditional and e-sports gamer base," BofA said.

"Long term we believe Nvidia's data center can sustain 30%+ annual growth driven by expanding adoption of AI accelerators, growing need for DPU compute offload, and eventual foray into server CPUs," BofA said.

Bank of America reiterated its Buy rating and increased its price target to $260 from $250.

JPMorgan: "We continue to see an upward bias in earnings estimates as we move through CY21 and into CY22."

"With solid product cycles in Gaming (new RTX 30 series family) and sustainable strong demand from Data Center customers (ramp of its A100 platform), we continue to see an upward bias in earnings estimates as we move through CY21 and into CY22," JPMorgan said.

JPMorgan reiterated its Overweight rating and increased its price target to $220 from $215.

Goldman Sachs: "The best positioned company to address and monetize the proliferation of accelerating computing."

"We believe the risk of an inventory correction significant enough to drive an earnings miss analogous to what transpired in 2017/2018 is limited given, 1) the company was quick this time around to introduce the Crypto Mining Processor to address mining demand; 2) while there appear to be ways to work-around the restrictions, the reduced hash rate on certain GeForce SKUs has dis-incentivized miners from 'hoarding' gaming GPU supply; and 3) unlike the 2017/2018 time frame, channel inventory is low and Nvidia is not at the very tail end of a gaming GPU product cycle," Goldman said.

Goldman Sachs does not currently have a rating or price target for Nvidia.

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