We have updated our 13-slide NVIDIA pitch for investors. NVIDIA is reporting fiscal Q3/19 results on Thursday, November 15th, after the market close. Last quarter’s results and fiscal Q3 guidance are following our models closely, with our adjusted r-squared increasing in most categories using fiscal Q2 results. https://drive.google.com/file/d/177JWB-bMiC9IrIZBwK90bZqvhPuncAPU/view?usp=sharing
Semiconductors
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With NVDA closing just below our target price of $276, we have ended our NVIDIA stock trade. Impressive 1080p footage of Battlefield V raytracing using NVIDIA’s soon to be released GeForce RTX GPU we believe has pushed the stock higher. With the higher stock price and no change in our financial forecast or target multiples, we believe the stock has reached a level in which it should no longer be purchased. This stock trade would have provided investors with an annualized return of 142% if executed at the time of our publication. Attached is our updated stock pitch on NVDA.
We have launched coverage of NVIDIA (NVDA-NASDAQ). Our gaming revenue estimates use metrics unrelated to historical financials (adjusted r-squared of 0.91). Datacenter and Automotive revenue on a historical basis can be modelled using a quadratic equation to a fairly good degree of accuracy (an r-squared over 0.95). We forecast sales from these segments using a time-series function. We also incorporate the potential impact from new products and industry demand. Our estimates on the cost side assume a steady gross margin, consistent dollar increases in operating costs and an income tax rate of 12%. Our financial model is available upon request for […]