Nvidia stock split won't change much, but still a buy: Analyst

Nvidia (NVDA) issued its first quarter results on Wednesday afternoon, beating Wall Street expectations and announcing a 10-for-1 stock split. KeyBanc Capital Markets Equity Research Analyst John Vinh joins Morning Brief to explain how Nvidia "met the bar" and what it will take for the chip giant to build on its success.

Vinh elaborates on Nvidia's 10-for-1 stock split: "From our perspective, the splitter post-play doesn't matter with us. But I think there's still very favorable risk-reward on Nvidia here. We think that they can do close to $50 in earnings. And you know, at that sort of earnings power, Nvidia is trading very attractively relative to its broader peers, kind of in the high teens, low 20s multiple, which is very attractive from a valuation perspective."

For more Nvidia, watch Yahoo Finance's interview with CEO Jensen Huang.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Nicholas Jacobino

Video transcript

Well, no surprise like we've been talking about Wall Street is bullish on Nvidia's results.

Number of analysts boosting their price targets on the stock this morning including our next guest raising his price target on the back of those results from 1200 to 1300 bucks a share.

We have John Vin.

He's keeping capital markets equity research analyst joining us here and John just your first take on the quarter and, and whether or not this was exactly what the street wanted to hear at this point in the story.

Yeah, I believe that they came through in flying colors.

I think the expectations kind of met, kind of the whispered by side expectations right now.

I would say that right now going into earnings, you know, obviously, as you had mentioned earlier, there was a little bit some consternation of uh maybe a demand pause ahead of the ramp of Blackwell.

So the expectations weren't sky high, but certainly, I think they uh they certainly met the bar there, met the bar and as we're taking a look at shares right now, pre market, they're up by about 7%.

The question continues to be how do they build on top of this success, John, what, what do they need to continue to, to show the street?

Yeah.

So I, I see a couple of kind of key catalysts in, in terms of their financial performance is in the second half, they're gonna start ramping their next generation blackwall GP US, you know, B 100 is gonna be a majority of the volume.

The A SPS on those GP US are gonna be 40% higher.

There's obviously uh also a lot more capacity coming online.

CO S has been uh previously kind of a bottleneck.

There's going to be a lot more supply coming online as well.

And then as we transition in 2025 NVIDIA announced that their GTC conference, this GB 200 platform and that's going to really kind of change the game here.

You're gonna go from NVIDIA shipping basically chips to their customers to shipping full service rack solutions.

So you're seeing a SPS go from hundreds of thousands of dollars for these HGX boards to full stack server racks, which you know, the APS are going to be closer to 1.5 to 2 million.

So that's going to be a pretty significant driver in terms of revenue inflection going into next year as well, John, one of the key takeaways from the earnings print and also from Yahoo Finance's exclusive interview with Jensen following those results with some of the push back that he had just the narrative going into this print was whether or not some of their customers were going to be holding off on current orders waiting for Blackwell chips and more advanced chips uh to arrive here in the future.

He had pushed back on that.

Is that at all still a concern for you?

I I if it ever was um it was uh it was, it was a slight concern, I think uh they obviously clearly addressed those concerns.

He said that, you know, each 100 demand increased throughout Q one.

And then he said, you know, hopper demand is going to increase increasingly ramp throughout Q two.

But the one thing I would say is that uh there is a little bit of sensitivity around kind of their China business.

Um You know, we believe that they've been shipping the uh H 20 which is a compliant GP U to the China market.

Um It, it doesn't require an export license and we, we think that was a meaningful contributor like in the near term to their financial results and obviously a pretty, pretty sensitive topic because you've seen the Biden administration start to come down a little bit more harshly on what can and cannot be shipped to the China market.

John investors, traders waking up this morning and trying to figure out if they didn't already have this as part of their strategy yesterday, going into the print or even thereafter, whether now with a split that's announced and ultimately as that comes forward, it might on cost at least make it look cheaper to a lot of retail investors even out there.

Do they add on NVIDIA to their portfolio?

And, and what's the strategy there?

Kind of post split?

Yeah, I mean, we're from our perspective, it split or post play doesn't matter to us.

But I, I think there's still very favorable risk reward on NVIDIA here.

You know, we think that they can do close to $50 in earnings and you know, that sort of earnings power, you know, NVIDIA is trading uh very attractively relative to its broader peers, right?

Kind of in the high teens, low twenties multiple, which is very attractive from a valuation perspective, from our, from our point of view, John, I wanna get your thoughts on what we heard from Jensen about supply, clearly demand is there.

But there are certainly some supply challenges at this point.

For NVIDIA, here's what he had to say to Yahoo finance last night.

Every every component, every, every part of our data center is the most complex computer the world's ever made.

And so it's sensible that almost everything is constrained.

So John, what position does that leave NVIDIA?

Because yes, it's a good position to be in to a certain extent you want that demand to be there, but you also don't want it to hinder and we on growth as well too.

Yeah, I think it's gonna be um kind of a near term constraint as they start to ramp Blackwell into the second half.

But um I think NVIDIA has done a, a magnificent job of setting up their product roadmap so that it can seamlessly transition um and work through these supply constraints, right?

As, as, as the supply chain and as NVIDIA starts to ramp Blackwell into the second half, uh recall that they are also ramping each 200 right, which is kind of a next generation H 100 GP U is part of the Hopper family.

Uh that GP U is not really supply constrained.

So as they're ramping that um you know, we we believe that NVIDIA obviously, it's gonna be able to work through these supply constraints and ship to volume probably late this year on, on B 100 John Vin who is the key bank, capital markets, equity research analyst, John, always a pleasure to grab some of your insights.

Thanks for hopping on to break down Nvidia's latest financial performance with us.