Analysts continue to bet on Nvidia despite a disappointing quarter, with some believing its weak forward guidance signals a possible end for the battered chip stock. Nvidia reported quarterly results on Wednesday that missed expectations on the top and bottom lines. The company also shared current quarter estimates that also disappointed, as it faces a challenging gaming market and macro conditions. Nvidia’s loss didn’t come as a surprise to many after the company released disappointing preliminary results earlier this month that sent shares tumbling. Despite the findings, Piper Sandler maintained its overweight rating on the stock, noting that the earnings bottom line should come in the October quarter as the company launches a slew of new products that could boost earnings going forward. “We truly believe NVIDIA’s data center business should normalize soon, while gaming growth should pick up next year,” analyst Harsh Kumar wrote in a note to clients. “These trends, along with the AI and Omniverse momentum, keep us optimistic about the future.” Timothy Arcuri of UBS echoed Kumar’s sentiment, noting that the correction in the gaming industry is “mostly in the rearview mirror.” He believes strong demand opportunities remain for the data center business with a host of “untapped demand pools.” “While there’s no debate that NVDA’s F3Q23 guidance is meaningfully worse than expected, we counterintuitively believe this could turn out to be the positive reset/hope investors have been waiting for,” said Aaron Rakers. of Wells Fargo. To be sure, not everyone believes Nvidia is in the clear yet. “Overall, we are surprised by the size and duration of the correction in Gaming (deeper/longer than the correction in 2019), but we believe the most important concern for investors is potential cracks in its Gaming Center business.” of Data”, writes Deutsche Bank. Ross Seymour. The analyst maintained his hold rating on the stock but lowered his price target to $165 from $175 per share, representing a 4% decline from Wednesday’s close. Cowen’s Matthew Ramsay believes the stock could remain limited in the near term, as doubts persist about the company’s data center business in the not-too-distant future. As of Wednesday’s close, Nvidia shares have fallen more than 41% since the start of the year and are down more than 50% from their 52-week high. The chipmaker’s shares fell 4% in premarket Thursday. — CNBC’s Michael Bloom contributed reporting
