Hot Tech stock to watch: NVIDIA Corporation (NASDAQ: NVDA)

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NVIDIA Corporation (NASDAQ: NVDA) stock rose 0.2% after the company posted better than expected results for the first quarter of FY 20 on the back of a rebound in the gaming market resulting in higher GPU sales. New product launches this quarter included the GeForce GTX 1660 Ti, 1660 and 1650 which bring Turing to the high volume PC gaming side for both desktops and laptops. These GPUs deliver up to 50% performance improvement over their Pascal based predecessors leveraging new Shader innovations. The company project continued growth in gaming laptops this year. GeForce gaming laptops are one of the shining spots of the consumer PC market. This year OEMs have built a record of nearly 100 GeForce gaming laptops.

NVDA in the first quarter of FY 20 has reported the adjusted earnings per share of 88 cents, beating the analysts’ estimates for the adjusted earnings per share of 81 cents. The company had reported 31 percent fall in the adjusted revenue to $2.22 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of $2.19 billion. The revenue was impacted by lower GPU sales compared to the prior year period. For the gaming business, revenue of $1.05 billion was down 39% year-on-year and up 11% sequentially.

Meanwhile, President Donald Trump had raised tariffs on $200 billion worth of Chinese goods to 25% and said another $325 billion of Chinese goods could soon see their tariffs go up. China responded by hiking tariffs on $60 billion of US goods. The renewed trade tensions have put semiconductor shares under the microscope as they are particularly sensitive to Chinese demand.

For the second quarter 2020, Nvidia expects revenue to be of $2.55 billion at the midpoint, plus or minus 2%. That was better than the $2.53 billion that analysts were hoping for. The adjusted gross margins are expected to be 59.5%, plus or minus 50 basis points.

Meanwhile, in March this year, NVIDIA acquired Israeli-based chipmaker Mellanox Technologies for $6.9 billion, which is the biggest deal done till date. The buyout is expected to augment its data center offerings. The company clinched the deal from Intel which was also on the race to buy Mellanox. This acquisition would give a fillip to the top line in the near future.

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