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Semiconductors Stocks

Nvidia (NVDA) Q1-2024 Earnings Preview: High Expectations and Market Optimism

Source: Nvidia

Nvidia Earnings Preview – Q1-2024 

The big event is finally here (Post-market Wednesday, May 22nd) and expectations are sky-high! 

Consensus estimates are for earnings of $5.58 (up 412% YoY) and revenues of $24.6Bn, (up 242% YoY). However, analysts seem to be pointing out that anything less than $5.75 and $26Bn would lead to disappointments. Similarly, expectations for higher guidance for Q2 are also, well, high. Just meeting consensus estimates of $6 per share and $27Bn won’t cut it.

Wall Street remains optimistic – the average price target is $1,040 a 9% upside, with a high of $1,400 from Rosenblatt Securities, who believe that there won’t be any air pockets transitioning from the H(Hopper) series to the B (Blackwell) series, even as AWS this morning confirmed that they would wait for the Blackwell to ship before buying more Hoppers.

Other Wall Street analysts also have higher-than-average targets from $1,100 (Barclays) to $1,200 (Baird).

Seeking Alpha analysts, not to be outdone also talk of the large and growing TAM, with one estimate of $600Bn by 2030, extrapolating growth from the Chips Act, the massive Capital expenditures from mega-caps like Microsoft, Google, Meta, and Oracle, plus the partnership with Dell, new AI use cases and even proxying TSM’s manufacturing capacity. So yes, there are plenty of defensible theories about why this AI gravy train won’t slow down.

For my part, I last bought Nvidia for around $780 on April 22nd, and with a high exposure in it, don’t plan to add more for now. It should remain a very strong, high-conviction, core holding for a long time. I will be looking out for other AI stories.

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Semiconductors

Nvidia (NVDA) Update: $715-$720 – Taking Profits While Maintaining Long-Term Outlook

source:nvdia

Nvidia (NVDA) $715-$720. Planning to take profits, and reduce position by about 10% this week.

Nvidia reports Q4-FY24 earnings after market tomorrow, 02/21 and expectations are high for an impressive beat and raise for FY2025. Nvidia has a January year-end.

Nvidia is the largest holding in my portfolio and I need to reduce it a bit to keep my risk rules and parameters intact. I also believe that expectations are a little too rich for my liking and anything less may be hammered, instead of the usual earnings pop there could be a selloff. Nonetheless, it remains a great investment over the long term and I wouldn’t sell more than 10-15% of my position. Just pure profit-taking and risk control.

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Semiconductors

Teradyne (TER) Earnings Preview: BUY at $105-$107 Amid Strong Growth Prospects

source

Teradyne reports Q4-23 earnings after the market today.

TSM is Teradyne’s biggest customer for its semiconductor testing equipment, and its bullish guidance of 20-25% growth for 2024 is a big plus for Teradyne; especially after Teradyne’s two years of declining sales and earnings, a lot of which was pandemic indigestion and the slow rollout of the N3 process node from TSM in 2023. However,  N3 production and delivery is going to expand tremendously in 2024 and 2025 and will spur demand for  Teradyne’s testing equipment.

This probably will not be evident in 2023 Q4 results. Q4 expectations are low – only $0.67 in EPS and $675Mn in revenues, and for the full year 2023 are $2.70 in EPS and 2.67Bn in sales.  In my opinion, consensus earnings and revenues for 2024 are too low at $3.64 and $3Bn in sales – instead,  *I believe earnings will be between $4 to $4.25, and sales over $3.2Bn*. Teradyne has good operating leverage and earnings should grow to over $6 by 2025. *That’s over 40% earnings growth for the next two years.*

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Cloud Service Providers

Microsoft (NASDAQ) Q2 Earnings Preview: AI Growth and Cloud Performance in Focus

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Microsoft (NASDAQ:MSFT) is scheduled to report its second-quarter results on Tuesday, January 30th, after market close, kicking off tech earnings.
Analysts expect a year-over-year increase in both the top and bottom lines, with earnings per share of $2.77 on revenues of $61.13 billion.

The Redmond, Washington-based company recently became the second tech giant, after Apple (AAPL), to cross the $3 trillion mark, buoyed by its artificial intelligence products. Its shares have surged nearly 63% in the last 12-months.

Microsoft (MSFT) has poured billions of dollars into OpenAI, making it the startup’s largest investor. This has let it get ahead of rivals Alphabet (GOOG)(GOOGL), Amazon.com (AMZN), and Meta Platforms (META) in the AI race.

The technology underlying OpenAI’s ChatGPT has become entwined in Microsoft (MSFT) products.

The Windows maker recently expanded access to its generative AI offering Copilot. The subscription plan is now offered to individuals and small businesses.

Copilot, which Microsoft (MSFT) dubs as an “everyday AI companion,” is intended to assist writers, programmers, creators, and designers.

According to investment firm Citi, a 5% adoption rate by its 77M customers using Microsoft 365 could add $925 million in revenue by fiscal year 2025. An adoption rate of 15% could add $2.7 billion in sales.

Analysts at Wedbush believe Microsoft (MSFT) will be the most important earnings report and conference call in all of earnings season.

The company is expected to handily beat expectations for the December quarter. Investors will be focusing on the Azure growth metric and the performance of its cloud business.

While AI be a dominant theme in 2024, analysts are of the opinion that 2025 will be the true inflection year.

Last week, Microsoft (MSFT) announced it was laying off 1,900 employees at its gaming division, primarily impacting employees at Activision Blizzard and Xbox.

Over the last three months, the company’s estimates have seen substantial upgrades. Its earnings per share estimates have been revised upwards seven times vs. one downward move, while revenue estimates have seen seven upward moves, compared to two downward revisions.

Seeking Alpha analysts at large consider MSFT a Buy. This compares with average Wall Street rating of Strong Buy and SA Quant rating of Hold.