NVDA - Peak Nvidia: Potential Downside Risk From Front-Loading Of Chips By Cloud Platforms
2024-05-30 13:21:35 ET
Summary
- Nvidia Corporation released another blockbuster earnings where it mentioned that large cloud providers like Amazon’s AWS, Microsoft’s Azure and Google Cloud make up “mid-40%s” of Data Center revenue.
- Data Center Revenue itself made up over 85% of the total revenue for Nvidia, which shows the massive impact of recent purchases by cloud providers on Nvidia’s performance.
- It is highly likely that cloud providers are front-loading their purchases, and the current scale of purchases will not last beyond a few quarters.
- Nvidia and other chip stocks have a very high correlation between stock movement and EPS estimates of 2 fiscal years ahead.
- A drop in the scale of purchases by cloud providers is likely, which will lead to downward correction in forward EPS estimates as well as increase the bearish sentiment towards the stock.
Nvidia Corporation's ( NVDA ) blockbuster first quarter has increased the future expectations of Wall Street. There is an overwhelming number of Strong Buy and Buy ratings for the stock among the analysts. Nvidia announced revenue of $26 billion in the recent quarter. Out of this, 86% or $22.5 billion was contributed by the Data Center segment....
Peak Nvidia: Potential Downside Risk From Front-Loading Of Chips By Cloud Platforms