NVIDIA Corporation’
s
NVDA
fourth-quarter fiscal 2021 results, scheduled for a Feb 24 release, are likely to reflect benefits of stellar demand for cloud computing and data centers.
The company’s fate is tied to its data-center segment, which accounts for a bulk of NVIDIA’s revenues. Robust year-over-year and sequential growth in data-center revenues in the last reported quarter, along with management’s upbeat guidance for the soon-to-be-reported quarter, raises our optimism around this segment.
Notably, the Zacks Consensus Estimate for the data-center segment revenues for the fiscal fourth quarter is pegged at $1.93 billion, indicating a surge of 99% year on year and 2% sequentially.
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to know how the company’s overall fiscal fourth-quarter performance is anticipated to have been.
Strong Data-Center Business to Have Aided Q4 Performance
NVIDIA’s fiscal fourth-quarter performance is anticipated to have benefited from strength in its data-center business on the growing adoption of cloud-based solutions amid the coronavirus pandemic-led remote-working and online-learning trend.
NVIDIA Corporation Price and Consensus
NVIDIA Corporation price-consensus-chart
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NVIDIA Corporation Quote
The work-and-learn-from-home wave is stoking demand for cloud storage. Furthermore, the lockdown has boosted the usage of online and e-commerce services globally. Therefore, data-center operators are enhancing their capacities to accommodate the demand spike for cloud services.
The data-center business presents a solid growth opportunity for the firm. As more and more businesses are shifting to cloud, the need for data centers is surging. This is likely to have positively impacted the company’s quarterly performance. Increase in Hyperscale demand and growing adoption in the inference market are anticipated to have been tailwinds as well.
The rising adoption of Conversational AI among hyperscale customers is likely to have been a key driver during the period in discussion. NVIDIA considers Conversational AI to be a powerful catalyst for the company in both training and inference. Also, the rising adoption of Natural Language Processing by cloud players is expected to have been an upside during the fiscal fourth quarter.
Further, growing adoption of the company’s T4 GPU in public clouds makes us optimistic this earnings season. Solid public cloud deployments and higher demand for AI video analytics applications are driving demand for its T4 GPUs.
Preferred by the data-center operators, NVIDIA’s GPUs are likely to have helped the company grab a larger market space during the fourth quarter. Their impact on the quarterly performance remains to be seen.
Zacks Rank and Key Picks
Currently, NVIDIA carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader technology sector include
Apple
AAPL
,
Facebook
FB
and
Zoom Video Communications
ZM
. While Apple and Facebook sport a Zacks Rank #1 (Strong Buy), Zoom carries a Zacks Rank #2 (Buy) at present. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
The long-term earnings growth rate for Apple, Facebook and Zoom is currently pegged at 11.5%, 19.2% and 25%, respectively.
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