Nvidia’s latest results suggest a gaming bottom is in sight for its battered semiconductor stock, analysts say. The chipmaker posted a mixed quarter on Wednesday, with earnings falling slightly below analyst expectations. Sales were down 17% year over year. Nvidia’s gaming division reported a 51% drop in revenue as the PC gaming market slows from pandemic-era growth and retailers struggle with overstocking. Despite the tricky gaming pressure, Wells Fargo’s Aaron Rakers said the bank is growing confident that the division is nearing its low point, and expects inventory to reach near “normalized levels” starting in the fourth quarter. “New product in the gaming segment should return the product segment to sequential growth in the January quarter, a departure from the market-brightening action the company had been on in recent quarters,” Morgan Stanley’s Joseph Moore said in a note to Thursday. customers. . “While the speed of recovery remains questionable, it is clear that the 2-hour numbers reflect the stock clearing, and we continue to expect a recovery next year.” Bank of America’s Vivek Arya echoed a similar sentiment, viewing the current period as an “inflection quarter” for chip stocks. Arya expects revenue and earnings per share growth to accelerate again after the current fiscal year. Analysts see particular strengths in the company’s data center business, where revenue grew 31% year over year. “In Data Center, the company continues to maintain its Y/Y growth trajectory, driven by strong cloud spending from US hyperscalers, continued enterprise/vertical adoption, and strong network growth (easing supply constraints) that more than offset weak demand in China.” Harlan wrote. Sur of JPMorgan Thursday in a note to clients. Sur expects continued growth as new product cycles increase. The bank adjusted estimates for the stock, but reiterated its overweight rating and maintained its $220 price target, suggesting shares could rise 38% from Wednesday’s close. Of course, some challenges and risks remain for Nvidia in the coming months. That includes softness in China and cost-cutting initiatives that could affect spending plans in the short term, Arya wrote. Nvidia’s stock has plummeted about 46% this year. Shares rose more than 1% during Thursday’s premarket. — CNBC’s Michael Bloom contributed reporting
Nvidia’s results suggest the gaming business is close to an all-time low, analysts say