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Citi maintains $575 target on NVIDIA shares, reiterates buy rating

EditorNatashya Angelica
Published 2024-02-21, 05:24 p/m
Updated 2024-02-21, 05:24 p/m
© Reuters.

On Wednesday, Citi reaffirmed its Buy rating and a $575.00 price target on shares of NVIDIA (NASDAQ:NVDA), following the company's financial results for the January quarter. NVIDIA reported revenues of $22.1 billion and non-GAAP earnings per share (EPS), excluding stock-based compensation (SBC), of $5.16. These figures surpassed both Citi's expectations of $20 billion in revenue and $4.58 EPS, and the consensus estimates of $20.4 billion and $4.59, respectively. The company also provided a higher-than-anticipated revenue guidance of $24 billion for the April quarter, exceeding Citi's forecast of $20 billion and the market consensus of $21.5 billion.

The analyst noted that increased shipments of NVIDIA's Hopper GPU were a key factor in the company's sales and margin outperformance for the quarter. NVIDIA's non-GAAP gross margin (GM) for the January quarter reached 76.7%, which was above Citi's prediction of 75.5% and the consensus of 75.4%. The forecast for the non-GAAP GM in April is set at 77%, also surpassing both Citi's estimate of 74.8% and the market's expectation of 75.7%.

Segment-wise, NVIDIA's Data Center sales saw a significant 27% quarter-over-quarter increase, compared to the predicted 14% by Citi and 15% by the market consensus. Gaming revenue remained steady quarter-over-quarter, defying Citi's and the consensus predictions of an 8% and 3% decline, respectively. Professional Visualization sales climbed by 11% quarter-over-quarter, which was higher than both Citi's and the consensus estimates of 6% and 4%. Additionally, Automotive sales grew by 8% quarter-over-quarter, outpacing the forecasted growth of 3% by Citi and 6% by the consensus.

Investors were directed to focus on several aspects during the earnings call, including any updates on the AI accelerator total addressable market (TAM), the sustainability of broad data center sales, new data points from Gen AI applications or products indicating demand durability, changes in supply dynamics, plans for offering custom chips, and progress on introducing U.S. restriction-friendly AI chips.

InvestingPro Insights

NVIDIA (NASDAQ:NVDA) has recently caught the attention of investors and analysts alike with its impressive financial performance. Citi's reiteration of a Buy rating and a $575.00 price target aligns with the company's strong revenue and earnings figures. To further understand NVIDIA's market position and future potential, let's delve into some key metrics and insights from InvestingPro.

Currently, NVIDIA boasts a substantial market capitalization of $1670.0 billion USD, reflecting its significant presence in the market. The company's P/E ratio stands at 87.03, which might seem high, but it's important to note that NVIDIA is trading at a low P/E ratio relative to its near-term earnings growth, as indicated by one of the InvestingPro Tips. This suggests that investors are optimistic about the company's growth prospects. Additionally, NVIDIA has experienced a remarkable revenue growth of 57.07% over the last twelve months as of Q3 2024, showcasing its ability to expand its financial top line impressively.

Another InvestingPro Tip highlights that NVIDIA has a perfect Piotroski Score of 9, suggesting a strong financial position. This score is particularly relevant for investors as it assesses the company's financial strength based on nine criteria, including profitability, leverage, liquidity, and operating efficiency. Moreover, NVIDIA's strong return of 236.4% over the past year is a testament to its performance in the market and investor confidence.

For those looking to delve deeper into NVIDIA's financial health and market prospects, InvestingPro offers additional insights and tips. In fact, there are 23 more InvestingPro Tips available, which provide a comprehensive analysis of the company's performance and potential investment opportunities. Interested readers can access these valuable tips and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

Investors considering NVIDIA as a potential addition to their portfolio would find these insights particularly useful for making informed decisions, especially when evaluating the company's growth trajectory and market valuation.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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