Nvidia Should Beat Again (Rating Upgrade)

Summary

• Nvidia Corporation continues to show strong growth and profitability, with Q1 results exceeding expectations across all segments. I believe Nvidia should beat Q2 expectations again — read on.
• What looks surprising is that the market still hasn't fully priced in Nvidia's dominance in AI for the next few years.
• The less than 1% increase in EPS expectations after the Q1 release makes the final Q2 consensus estimate even more pessimistic than before the Q1 release.
• The market is pricing in virtually no operating leverage and apparently assumes that the company has already peaked on this issue.
• I see a “fair value” of $157.3/sh. (12-month target), which is about 26% above the current stock price. Nvidia Corporation stock is a “Buy”.