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Nvidia is ‘a splash of cold water,’ analysts say and cut price target

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FILE PHOTO: Nvidia co-founder and CEO Jensen Huang attends an event during the annual Computex computer exhibition in Taipei, Taiwan May 30, 2017. REUTERS/Tyrone Siu Nvidia co-founder and CEO Jensen Huang attends an event during the annual Computex computer exhibition in TaipeiThomson Reuters
  • Nvidia lowered its fourth-quarter revenue guidance two weeks ago, citing weaker economic conditions in China and disappointing sales of its gaming and datacenter platforms. 
  • Berstein has subsequently lowered its price target and rating for the chip maker, saying the latest cut appears much more fundamentally demand-driven.
  • Nvidia is set to report fourth-quarter earnings after Thursday’s closing bell.
  • Watch Nvidia trade live. 
Nvidia is likely to remain hamstrung in the wake of its chilly guidance cut two weeks ago, Berstein says.

The chip giant on January 28 lowered its fourth-quarter revenue guidance to nearly $2.2 billion, down from its previous expectation of around $2.7 billion, citing significantly weaker economic conditions in China and disappointing sales of its gaming and datacenter platforms. 

“The latest cut appears much more fundamentally demand-driven, with the question of the ‘true’ run-rate of the gaming business remaining up in the air for now,” a group of Berstein analysts led by Stacy Rasgon said Monday in a note titled “A splash of cold water? Downgrading to Market-Perform.”

The team slashed its price target to $175 from $250, and changed the bullish “outperform” rating it had held. Nvidia shares were down as much as 3.21% to $143.42 apiece early Monday after the note was published. 

“We still believe in the long-term datacenter story,” Rasgon said. 

“But this is not like 18 months ago, when the absolute $ amounts were small, YoY growth was massive, and expectations had plenty of room to move higher. Now NVDA has to show ever-increasing growth off of a base that is growing ever larger. Headline risk likely to continue increasing. And tactically the near-term cloud spending environment is unfavorable, driving near-term downside.” 

Last quarter, Nvidia cited weakness due to an excess of mining graphics processing units for cryptocurrency amid a massive decline in the price of digital coins last year.

Analysts have also noted Nvidia’s struggles with its transition to ray-tracing chips. Ray tracing, which allows for more cinematic and realistic visuals, is a niche technology that Nvidia has been touting in its GPUs. Early January, the company introduced the GeForce RTX 2060, its cheapest graphics card that can provide ray tracing.

 

“When you turn on the ray tracing, it affects the overall performance of the GPU pretty substantially,” Christopher Rolland, a semiconductor analyst at Susquehanna International Group recently told Markets Insider.

“Nvidia promises people real-time ray tracing, but you practically can’t use it. That’s definitely a disappointment.”

 

The company is set to report fourth-quarter earnings after Thursday’s closing bell. Analysts surveyed by Bloomberg are expecting $0.84 adjusted earnings per share on $2.3 billion in revenue. 

Nvidia was up 10% so far this year.

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More groups join in support of women in STEM program at Carleton

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OTTAWA — Major companies and government partners are lending their support to Carleton University’s newly established Women in Engineering and Information Technology Program.

The list of supporters includes Mississauga-based construction company EllisDon.

The latest to announce their support for the program also include BlackBerry QNX, CIRA (Canadian Internet Registration Authority), Ericsson, Nokia, Solace, Trend Micro, the Canadian Nuclear Safety Commission, CGI, Gastops, Leonardo DRS, Lockheed Martin Canada, Amdocs and Ross.

The program is officially set to launch this September.

It is being led by Carleton’s Faculty of Engineering and Design with the goal of establishing meaningful partnerships in support of women in STEM.  

The program will host events for women students to build relationships with industry and government partners, create mentorship opportunities, as well as establish a special fund to support allies at Carleton in meeting equity, diversity and inclusion goals.

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VR tech to revolutionize commercial driver training

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Serious Labs seems to have found a way from tragedy to triumph? The Edmonton-based firm designs and manufactures virtual reality simulators to standardize training programs for operators of heavy equipment such as aerial lifts, cranes, forklifts, and commercial trucks. These simulators enable operators to acquire and practice operational skills for the job safety and efficiency in a risk-free virtual environment so they can work more safely and efficiently.

The 2018 Humboldt bus catastrophe sent shock waves across the industry. The tragedy highlighted the need for standardized commercial driver training and testing. It also contributed to the acceleration of the federal government implementing a Mandatory Entry-Level Training (MELT) program for Class 1 & 2 drivers currently being adopted across Canada. MELT is a much more rigorous standard that promotes safety and in-depth practice for new drivers.

Enter Serious Labs. By proposing to harness the power of virtual reality (VR), Serious Labs has earned considerable funding to develop a VR commercial truck driving simulator.

The Government of Alberta has awarded $1 million, and Emissions Reduction Alberta (ERA) is contributing an additional $2 million for the simulator development. Commercial deployment is estimated to begin in 2024, with the simulator to be made available across Canada and the United States, and with the Alberta Motor Transport Association (AMTA) helping to provide simulator tests to certify that driver trainees have attained the appropriate standard. West Tech Report recently took the opportunity to chat with Serious Labs CEO, Jim Colvin, about the environmental and labour benefits of VR Driver Training, as well as the unique way that Colvin went from angel investor to CEO of the company.

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Next-Gen Tech Company Pops on New Cover Detection Test

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While the world comes out of the initial stages of the pandemic, COVID-19 will be continue to be a threat for some time to come. Companies, such as Zen Graphene, are working on ways to detect the virus and its variants and are on the forefronts of technology.

Nanotechnology firm ZEN Graphene Solutions Ltd. (TSX-Venture:ZEN) (OTCPK:ZENYF), is working to develop technology to help detect the COVID-19 virus and its variants. The firm signed an exclusive agreement with McMaster University to be the global commercializing partner for a newly developed aptamer-based, SARS-CoV-2 rapid detection technology.

This patent-pending technology uses clinical samples from patients and was funded by the Canadian Institutes of Health Research. The test is considered extremely accurate, scalable, saliva-based, affordable, and provides results in under 10 minutes.

Shares were trading up over 5% to $3.07 in early afternoon trade.

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