Investing.com – NVIDIA (NASDAQ:) was riding high on Friday following a target-price hike from RBC after concerns about weakness in data-center spending were swept away by Intel’s (NASDAQ:) upbeat third-quarter report and guidance.
“Data center came back much more strongly than even we anticipated this quarter,” Intel (NASDAQ:) chief financial officer George Davis told Reuters in an interview after the release of Intel’s third quarter results.
That was music to the ears of many Nvidia investors and analysts alike, as data center segment sales make up more than quarter of the chipmaker’s overall revenue. Nvidia revenue hit $11.7 billion in its 2018-2019 fiscal year and looks as if it will top $12 billion this year.
Pointing to Intel’s comments on higher-than-expected demand in its data center business, which focuses on server chips, RBC lifted its price target on Nvidia to $251 to $217, forecasting that the chipmaker will likely experience higher growth relative to CPU server demand.
NVIDIA (NASDAQ:) surged more than 3.8% higher.
“Nvidia will experience a return to growth as utilization of GPUs (graphics processing units) in the Data Center have officially improved and are no longer running below normal,” RBC said in a note to clients.
The anticipated return for data center growth comes just as U.S.-China relations are seemingly on the mend.
The United States and China are close to finalizing some sections of their “phase one” trade agreement after a phone call between both trade teams, CNBC reported on Friday, citing a statement from the Office of the U.S. Trade Representative.
RBC also said investors were too cautious on Nvidia’s gaming business, which still makes up the bulk of revenue. That echoed earlier sentiments from some of its peers on Wall Street.
Earlier this month, Evercore ISI raised its price target on Nvida to $225 from $185, on the back of expectations for a ramp up in gaming demand and a recovery in the data center division, driven by an anticipated product refresh.
Nvidia is up about 53% so far this year and currently has an average price target of $193.1, according to consensus estimates from Investing.com.
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