In short, Nvidia's two biggest businesses are humming along like proverbial well-oiled machines. Gaming, which comprises 45% of the business, should grow as well, especially in Q3 later this year once Nvidia releases its promised "Ada Lovelace performance gaming GPU." ![]() Sales of chips to data centers, which Schafer abbreviates simply "DC," comprise 43% of the company's revenues and are expected to show 10% sales growth in Q1. Why does Schafer think Nvidia stock is still going up?Ĭurrently, Nvidia's business is dominated by, and about equally divided between two key areas - data centers (including both those used for artificial intelligence and for cloud computing) and gaming. In the near term, however, Schafer still sees Nvidia stock as about 86% undervalued. That could be a problem limiting share price growth going forward. As the analyst explained, "group multiple compression" in the semiconductors sector means that investors are rewarding chipmakers lower stock prices for the profits they earn. That's not the reason Schafer cut his price target, however. Schafer actually thinks Nvidia might report only $1.29 per share next week, but predicts Nvidia's guidance for Q2 will call for $1.37 per share in earnings. As the analyst explained, he sees "upside" to consensus forecasts over the next couple quarters.
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