Here comes Nvidia … (NVDA)

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Nvidia is set to report its first-quarter results after Thursday’s closing bell.
Analysts and investors will be on the lookout for any updates on how business is being impacted by the trade war.
Semiconductors are particularly sensitive to Chinese demand.
Watch Nvidia trade live.

Nvidia is set to report its first-quarter results after Thursday’s closing bell.

The chipmaker is expected to earn an adjusted $0.81 a share on revenue of $2.19 billion, according to analysts surveyed by Bloomberg. On a GAAP basis, it’s expected to make $0.56 a share.

Nvidia, and other chipmakers have been under pressure for much of the past month as trade tensions between the US and China have reignited. Last week, President Donald Trump 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.

"A major concern here, the products would be deemed mission-critical and the US would prevent shipments to China, or tax them heavily (a large buyer of GPUs)," RBC analyst Mitch Steves wrote in a recent note.

"We think China trade talks will negatively impact our universe. Most notably, we think GPUs and Semi-cap are most at risk to the downside if tensions continue to rise."

Ahead of the release, SunTrust Robinson Humphrey analyst William Stein said investors should focus on the company’s long-term growth prospects and not the short-term volatility that has been impacting its share price.

"We believe NVDA’s IP (chips and software) address some of the most attractive end markets in all of tech (Gaming, server acceleration, AI training & inference, and autonomous driving) that represent a >$100B TAM in the mid-2020s," he wrote.

"The company’s competitive advantage is not isolated to its GPU chips (which competitors can market), but instead relate to its culture of innovation, software tool investment, and ecosystem of incumbency."

Stein has a "buy" rating and $210 price target — 31% above the $160 where shares were trading on Thursday.

Nvidia is up 20% this year.

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