NVDA: 1Q Preview; Gaming Slowdown Concerns Mount

NVIDIA stock has been on a tear. Over the last year alone, the stock is up a meteoric 193%. However, over the last several months, the stock has traded sideways as investors have become more concerned over a possible slowdown in several of the company’s segments.

In Gaming (which makes up 60% of revenue), difficult comparisons (especially in the second half of the year), a lack of a new GPU architecture from NVIDIA, and uninspiring VR apps all suggest that the Gaming segment growth could slow in 2017. Revisions over the last 3 months in this segment have been particularly sharp, with revenue estimates down 3.7% and 5.2% in 1Q and 2Q, respectively. Visible Alpha’s consensus estimates show decelerating YoY growth throughout the year, with growth rates decelerating significantly in 3Q and 4Q.

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Meanwhile, investors fear that growth will slow in the other major segments as well. In particular, investors are also concerned about growth in the Datacenter segment, where competition from Intel and AMD could limit upside. Consensus estimates have the segment slowing significantly from the 205% rate in 4Q16.

NVIDIA will report 1Q results tomorrow. Visible Alpha’s consensus estimates show expectations of non-GAAP EPS of $0.83 and overall YoY revenue growth of 48%.