Nvidia’s earnings could be a big win for the stock. What to expect.

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Strong performance is expected in the chipmaker’s gaming and data center businesses when it reports results on Wednesday.

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Nvidia

could be a big winner this earnings season, with earnings driven by strong performance in the chipmaker’s gaming and data center businesses, according to


Piper Sandler
.

“We are looking for a significant beat and upside when the company releases earnings on Wednesday after market close as gaming and data centers continue to perform well,” analyst Harsh V. Kumar wrote in a research note. .

A new round of GPU upgrades could boost gaming growth, he said. Kumar forecasts a 4.3% quarter-over-quarter increase for the January quarter, which the company could beat, he added.

Although demand for games remains strong and will continue to grow over the coming quarters, Kumar believes Nvidia (ticker:


NVDA

) the data center business will generate revenue this quarter. The analyst sees data center trends accelerating in 2022 and forecasts sequential growth of 7.5% this quarter. With trends reaccelerating, data center business could even reach double-digit growth, he added.

“We believe the data center business will be responsible for much of the revenue performance, translating into both EPS and a revenue beat,” he said.

Kumar said that in his view, Nvidia “is limited in supply at this point”, affecting both the gaming and data center businesses. Either way, the company is in a better position to source supplies than its competitors, he added. It expects next quarter guidance to increase sequentially, even though game sales are historically flat in the April quarter.

The analyst reiterated an outperform rating and $350 price target for the stock. On Monday, analysts at Truist also expressed an optimistic view on Nvidia’s earnings. For the team at Truist, Nvidia’s investment in artificial intelligence should prompt management and analysts to raise their earnings forecasts, pushing the stock price higher.

Nvidia rose 8.3% to $262.74 on Tuesday. The stock has lost 10.7% since the start of the year. Nvidia earlier this month dropped its bid to acquire chip designer Arm due to regulatory opposition.

Write to Sabrina Escobar at [email protected]

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