Why Nvidia Shares Rose on a Down Day
What happened
Nvidia (NASDAQ: NVDA) shares have taken it on the chin lately, down 32% in just the past month. But the stock is bucking the trend today, with shares up 1.4% when the technology-filled Nasdaq Composite index was down about 1% as of 3:45 p.m. ET.
So what
Nvidia pre-announced for a disappointing quarter, and it was worse than some investors even thought when it announced results in late August. Shares had dropped on the pre-announcement, but continued to plunge to 52-week lows after its fiscal 2023 second-quarter results were shared for the period ended July 31, 2022. Revenue from the company's gaming segment plunged 33% year over year.
Image source: Getty Images.
Sequentially, sales were down even more from the previous quarter. Overall revenue was down 19% versus the prior quarter, too. But there was more positive news as well, and Mizuho analyst Vijay Rakesh highlighted more of that side of the business yesterday, helping shares move higher on a generally down day for tech stocks.
Now what
Rakesh lowered his price target on Nvidia yesterday from $225 to $205 per share. Even at the lowered price, Nvidia shares would give investors a 58.5% return from Thursday's closing price. The analyst, not surprisingly, kept the stock at a buy rating based on that potential return, reports The Fly.
Rakesh pointed out that sales to major data center customers in the U.S. look to remain strong through the end of this year. Overall data center sales soared 61% year over year in the most recent quarterly period. At $3.81 billion, those sales represented 57% of Nvidia's business.
Rakesh doesn't think everything is rosy from here, however. He knows macro conditions are not ideal and could get worse. But he believes orders won't be canceled, but rather pushed back instead. Long-term investors won't fret too much if orders are simply delayed and Nvidia's growth path is extended. That seems to be why investors have ticked the stock up on a down market day today.
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Howard Smith has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
