I did not go into great detail on Nvidia's (NVDA) first quarter financial results in this (Thursday) morning's Market Recon column for one big reason. Nvidia deserves a column all its own. Performance is that good. The performance in my opinion, was simply amazing. For the period reported, Nvidia posted adjusted EPS of $3.66, easily crushing expectations. (GAAP EPS also easily beat the street.) Nvidia reported top line revenue ( a new record) of $5.66 billion, good for another beat and good enough for year over year growth of 83.8%.
Adjusted gross margin printed at 66.2%, up 70 basis points sequentially, and up 40 bps year over year. Adjusted operating income hit the tape at $2.557 billion, up 22% q/q, and up 112% y/y. Adjusted net income landed at $2.313 billion, up 18% q/q, and up 107% y/y.
Are you ready to look at the individual businesses? I hope so, because this lineup is hotter than Combs, Koenig, Ruth, Gehrig, Meusel, and Lazzeri. Let's dig in.
Nvidia reports two business segments and then subsequently a number of individual business lines. As to the segments, Graphics contributed $3.451 billion in revenue to the whole, up 106%, while Compute & Networking put $2.21 billion through the hoop, up 88%. Now for the different businesses.
Gaming put together sales of $2.76 billion (a new record), up 106%, and a mildly solid beat of consensus. I could go through the individual GPUs and what they have accomplished. It may also be pertinent that these are the kinds of chips that are used in the mining of cryptocurrencies so that was certainly a tailwind for the quarter. Know also that GeForce NOW currently has over 10 million members in more than 70 countries and is nearing a library of 1K different games.
Data Center posted revenue generation of $2.048 billion (say it with me... a new record), up 79% and also better than expectations. This unit saw an obvious boost from the Mellanox acquisition. On that acquisition and hopefully the next one... CEO Jensen Huang said, "Mellanox, one year in, has exceeded our expectations and transformed Nvidia into a data-center-scale computing company. We continue to make headway with our planned acquisition of Arm, which will accelerate innovation and growth for the Arm ecosystem. From gaming, cloud computing, AI, Robotics, self-driving cars, to genomics and computational biology, Nvidia continues to do impactful work to invent a better future."
For the firm's smaller businesses, Professional Visualization increased sales 21% to $372 million, well above consensus, while Automotive saw sales decrease 1% to $154 million, which still beat what Wall Street was looking for, and "OEM and Other" put together a $327 million quarter that crushed expectations on growth of 137%.
For the current quarter, the firm sees revenue at $6.3 billion +/-2%. Wall Street is down around $5.5 billion on this metric. $6.3 billion would be good for year over year growth of nearly 63%. Adjusted gross margin is expected to improve to 66.5%, adjusted operating expenses are seen landing at $1.26 billion, and effective tax rates are seen at 10%-ish.
I find this to be a constructive looking chart. Here me out. Yes, we have a selloff today. I think (and I am biased, so let's put that out front) that the only possible negative take-away from this chart is the gap created last week. That could mean that the space in between $587 and $594 may be revisited at some point. Sans that unwelcome reality, I see a nearly completed cup with handle pattern that will provide a $648 pivot in time.
I really like the way the shares have bounced off of the 200 day line twice. I really like the warm but not hot reading for Relative Strength. I like the shape of the 12 day EMA, in fact I like the shape of all three components of that daily MACD. The situation is this. I have a $740 price target on NVDA. I see an absolute bevy of five star analysts catching up to us on their NVDA target price this morning. I have to laugh (LOL), there I laughed. You know how much that research costs, yet how often are we so far ahead of "Wall Street"?... ahh, maybe it's our little secret that we have been running circles around them this whole time. Know why? Because we were "Wall Street'' when Wall Street was still Wall Street. When you had to beat somebody (or get beaten) face to face and live with the consequences. Now those were good times.
Okay, gang... this is the deal. I am not changing my target price. Yet. You give me a "take and hold" at my pivot of $648, and I'll give you a new target price of $780. Maybe $810 if I'm feeling aggressive. First, that pivot. I am taking my panic point up to today's 50 day SMA which is just a slight move from $573 to $577.
There you have it. On my command to move, you will proceed to go "get some"... 1.2.3.... Now, move.