This post was originally published on this site
In a note to investors on Monday, Cowen said the firm recently hosted NVIDIA Corporation (NASDAQ:NVDA) Founder and CEO Jensen Huang, CFO Collette Kress, and VP of IR Simona Jankowski for in-person investor meetings.
Analysts, who kept an Outperform rating and $180 price target on the stock, revealed that with headwinds in gaming and China top of mind, it has reduced near-term estimates “given further consumer weakness and government actions.”
However, they explained Nvidia’s management is confident both China and PC gaming will remain long-term growth markets and while they agree, Cowen chooses to model conservatively for now.
“Despite the recent US government export controls of NVIDIA’s flagship datacenter accelerators, management described China as still an important growth market for the company going forward,” wrote the analysts. “Mr. Huang pointed to two primary reasons for this view: (1) in the near-term, due to the interoperability of NVIDIA’s architectures (enabled by the CUDA abstraction layer), it is relatively straightforward for NVIDIA to work with its customers to identify alternative hardware that would not require export licensing for many workloads; and (2) in the long-term, NVIDIA is confident in its ability to navigate an export control-defined environment and the value of its accelerated computing platforms in China, even with mid-tier hardware SKUs.”
Meanwhile, in gaming, Cowen said Nvidia’s management referred investors to its $5 billion estimate for actual end demand across F2Q and F3Q23. However, the analysts said the company is “shipping far below that currently.”
“While the company acknowledged elevated ASPs/mix in recent periods, we believe exacerbated by shortages the past two years, it continues to expect ASPs to be a driver of Gaming growth in the future once normalized,” the analysts added. “While we are confident in NVIDIA’s prospects in both areas (China and Gaming), we are taking a more conservative view on near-term estimates given sharper consumer weakness and a fluid US export control environment.”
