What happened
Semiconductor stock Nvidia(NASDAQ:NVDA) got another lift on Tuesday when investment bank Piper Sandler predicted -- on the day before fourth-quarter earnings arrive -- that Nvidia will deliver a "significant beat and raise," asStreetInsider.comreported this morning.
As of closed Tuesday, shares jumped a solid 9.2% in response.
So what
"Overall, demand [for Nvidia's chips] continues to be strong for gaming given the adoption of RTX GPUs with ray tracing," Piper Sandler said this morning.
Even more important for long-term investors, Piper isn't just predicting a one-day pop in the stock price after earnings come out and beat expectations. The analyst said: "In our eyes, this growth appears to be in the early-to-mid stages of the growth curve, and with no signs of supply alleviating in the near term, it provides a nice backdrop for the gaming segment. On the data center side, we have heard from several companies that data center trends are very strong, which should benefit Nvidia."
Now what
In short, Piper Sandler is predicting that Nvidia will exceed expectations for 48% quarterly revenue growth and 58% earnings growth in its fourth-quarter report. But it's also predicting that the company will continue growing over the long term because the cyclical semiconductors industry is only in the early stages (or at worst, the middle) of its cycle of rising demand for chips, a cycle that should keep on growing for a few more years.
Assuming Piper is right, Nvidia is likely to comment on this trend in its earnings report tomorrow afternoon, and probably will raise guidance right after reporting on earnings. Considering that analysts were already expecting that the chipmaker will earn $4.34 per share in 2022 -- delivering 74% more profit than in 2021, on 60% revenue growth -- any raise in guidance that it delivers will mean that 2022 is going to be a great year to own Nvidia stock.