Is Nvidia The Next Intel?
In the last five years, Nvidia’s stock showed an astounding performance: +933.15%!
Intel, on the contrary, delivered only an increase of +32.55% which is an underperformance compared to Nasdaq’s rise of +112.51%.
Is Nvidia next Intel?
Chart 1: Nvidia vs Intel (orange) and Nasdaq (Yellow)
The current Price Earnings Ratio of Nasdaq is 26,1 which is above the Intel and under the Nvidia, see Table 1:
Table 1: Intel vs Nvidia; P/E and P/S
Intel and Nvidia, both companies increased their revenue but nvidia, especially in 2016, outperformed Intel in revenue growth:
Table 2: Intel vs Nvidia Revenue Growth
Earnings of Nvidia are more volatile than Intel’s but Nvidia’s earnings growth is also higher.
Table 3: Earnings per Share history of Intel and Nvidia
Nvidia seems “expensive” compared to Intel and Nasdaq but investors valuation is not because of company’s past performance:
In the first quarter of 2017, Nvidia delivered revenue growth of 48% and earnings growth of 240% in year to year basis.
Nvidia’s continuously increasing gross margin indicates that the company widens its economic moat:
Table 4: Nvidia’s Gross Margin
Goldman analyst Toshiya Hari raised his price target on Nvidia to $165 from $130, with the statement:
“Despite the recent stock price move, we remain very bullish on Nvidia…. Nvidia is exposed to and well-positioned in multiple secular growth markets including PC gaming, VR, Datacenter (AI/ML in particular), and self-driving cars. We see meaningful upside to Street estimates, with our FY18/19 EPS estimates 19%/55% above consensus. ….The partnership highlights continued traction ahead of autonomous vehicle deployments in the 2019 – 2020 timeframe, in our view, Nvidia has already partnered with automakers including Tesla, Audi, Mercedes and Volvo. Taken together, we believe Nvidia’s strong positioning in deep learning/AI, the importance of AI for autonomous driving, and Nvidia’s existing partnerships in automotive provide a solid runway for growth to ramp in the automotive business.”
Nvidia’s financials confirms that the company operates in growth markets and simultaneously widens its economic moat.
RBC Capital Markets also raised its price target on Nvidia to $150 from $138.
Analyst Mitch Steves explained his outperform rating on the stock with the statement:
“For data center, we see no slowdown in sight and believe the segment can continue its torrid triple-digit growth in 2017 and beyond,”
No Investment or Financial Advice.