Nvidia’s Q2’17 Earnings To Be Driven By The Strong Pascal Demand

Graphics processor manufacturer  Nvidia (NASDAQ:NVDA) is set to release its Q2 2017 earnings on August 11th. (Fiscal years wnd with January.) Nvidia started its fiscal 2017 on a strong note, with Q1 revenue and earnings per share (EPS) beating analyst estimates by a wide margin, driven by continued strength in Gaming, Professional Visualization, Data Center and Automotive computing devices. (Read Our Q1’17 Earnings Article.) The company’s Q2 2017 revenue guidance also came in slightly ahead of analyst expectation. As a result of the strong Q1 results, the optimistic Q2 guidance, and the strong demand for the newly launched Pascal GPU architecture, the company’s stock price is up approximately 65% since its Q1 2017 earnings release. We believe that continued growth in these key areas (Gaming, Professional Visualization, Data Center and Automotive) will fuel Nvidia’s Q2 2017 earnings as well.  Pascal will enable Nvidia to further extend its leadership across the four platforms, which presently account for 87% of the company’s total revenue, up from 81% a year ago.

While we believe that Nvidia’s revenue base will continue to increase at a strong pace in fiscal 2017, we maintain a cautious outlook on the stock price. (Read: What Led To The Surge In Nvidia’s Stock Price This Year, Why We Believe The Market Over-Reacted)

See our complete analysis for Nvidia

In March 2016, Nvidia introduced its newest GPU architecture, Pascal. Built on the 16 nm technology, the platform promises to offer massive performance and power efficiency improvement over its predecessor. Nvidia launched the first line-up of Pascal graphics cards (GTX 1080 and 1070) at Computex this summer, and the graphic cards continue to be in short supply and are often sold out or only available at a large premium over the suggested retail price. ^[1] The general consensus is that the strong demand will lead to a major uplift in Nvidia’s GPU revenue in Q2 2016 and beyond.

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1. Nvidia’s Pascal Will Be A Huge Revenue Boost, Seeking Alpha, July 11, 2016 [↩]