Price Targets – Fountainheadinvesting

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.

Morgan too recommends cybersecurity as an important sector for 2024.

I had made buy recommendations for FTNT and PANW in the last few days and Morgan’s price targets of $77 and $375 are very similar to mine, indicating there is still considerable upside left.

https://seekingalpha.com/news/4053959-palo-alto-on-top-at-morgan-stanley-world-preps-for-cyberattacks

Of the others in the article. I like these stories.

Crowdstrike – CRWD $280 – The best player in endpoint security, first recommended in Sep 2023 at a price of $165. Given the run up, I was hesitant to add more or recommend at this price.

It’s growing at 33%, as fast as Sentinel One, (S) which is 1/4 its size, so clearly the growth momentum is still there. Wells Fargo has a $315 Price Target, and longer term the TAM (Total Addressable Market) is massive and growing over 25% per year.

It has gone up around $40 (16%) from the beginning of the year, Buy on Declines.

Sentinel One (S) Cyber Security, $24, BUY Price Target – $30.

Long term Over 20%. Small Company, Volatile

Sentinel is one the fastest growers in cyber security with 100% growth last year, and expected growth of 35 to 40 % for the next three years. Sentinel’s valuation should grow on its transition to profitability and free cash flow generation – there have significant improvements in margins. For now, one needs to be prepared for the volatility that comes with just $800Mn revenue and a $7Bn market cap. Given the depth of its products and scope for improvements this is worth investing in.