NVIDIA : UBS recommends taking advantage of the stock's downturn
August 29, 2024 at 11:23 am EDT
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UBS renewed its Buy recommendation and $150 target on Nvidia on Thursday, advising investors to take advantage of the weak quarterly results to buy the stock.
In a note, the broker acknowledges that the US AI giant's forecast of sales of around $32.5 billion for the current quarter is slightly below Wall Street estimates.
It also points to the prospect of a decline in gross margin for the quarter - which ends in January 2025 - due to the lower profit margins generated by the next-generation Blackwell processor as a result of the complexity of its design.
However, the broker points out that the Californian group has reported a significant increase - for the first time in many quarters - in its purchase commitments and supply obligations, an encouraging element in its view.
From UBS's point of view, these two indicators should be watched closely as they herald future growth in the company's business.
These figures climbed by around 40% from one quarter to the next (i.e. a total of almost ten billion dollars), after having risen by only 15% in the previous quarter and having remained stable in the one before that, stresses the professional.
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NVIDIA Corporation is the world leader in the design, development, and marketing of programmable graphics processors. The group also develops associated software. Net sales break down by family of products as follows:
- computing and networking solutions (55.9%): data center platforms and infrastructure, Ethernet interconnect solutions, high-performance computing solutions, platforms and solutions for autonomous and intelligent vehicles, solutions for enterprise artificial intelligence infrastructure, crypto-currency mining processors, embedded computer boards for robotics, teaching, learning and artificial intelligence development, etc.;
- graphics processors (44.1%): for PCs, game consoles, video game streaming platforms, workstations, etc. (GeForce, NVIDIA RTX, Quadro brands, etc.). The group also offers laptops, desktops, gaming computers, computer peripherals (monitors, mice, joysticks, remote controls, etc.), software for visual and virtual computing, platforms for automotive infotainment systems and cloud collaboration platforms.
Net sales break down by industry between data storage (55.6%), gaming (33.6%), professional visualization (5.7%), automotive (3.4%) and other (1.7%).
Net sales are distributed geographically as follows: the United States (30.7%), Taiwan (25.9%), China (21.5%) and other (21.9%).
NVIDIA CORPORATION 
