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Tesla Partner Nvidia Shatters Sales Records, Tops Q1 Views

Shares of Tesla Motors ( TSLA ) partner Nvidia ( NVDA ) rocketed in after-hours trading Wednesday, after the graphics processing unit-maker toppled Wall Street’s fiscal Q4 and 2016 views, and guided to fiscal Q1 sales vastly above consensus views. Nvidia stock was up nearly 8% in extended trading Wednesday, after releasing its financial results, after rising 2.5% in the regular session, to 27.66. Nvidia stock hit an eight-year high near 34 at the end of 2015, before the stock market’s rough start to 2016. For its fiscal Q4 Jan. 31, Nvidia reported a record $1.4 billion in sales, as well as 35 cents earnings per share, up 12% and flat, respectively, vs. the year-earlier quarter. Both metrics topped Wall Street expectations for $1.31 billion and 32 cents. Three months ago, Nvidia guided to $1.3 billion in sales, plus or minus 2%. Nvidia ended fiscal 2016 with $5.01 billion in sales and $1.08 EPS, up 7% and 4%, and topping the consensus model of 29 analysts polled by Thomson Reuters for $4.92 billion and $1.05. Current-quarter guidance shot well above the consensus. For fiscal Q1, Nvidia sees $1.26 billion in sales, plus or minus 2%. That would be up 9.5% year over year. Wall Street had modeled $1.23 billion. Analysts also expect 28 cents EPS, which would be up 17% vs. the year-earlier quarter. Nvidia doesn’t provide an EPS outlook. Nvidia CEO Jen-Hsun Huang, in the company’s earnings release, credited investments in PC gaming, virtual reality, deep learning and autonomous vehicles for the Q4 beat. He also expects Nvidia to delve further into the nascent Internet of Things market. “Deep learning is a new computing model that teaches computers to find patterns and make predictions, extracting powerful insights from massive quantities of data,” he said in the release. “We are working with thousands of companies that are applying the power of deep learning in fields ranking from life sciences and financial services to the Internet of Things.” MKM analyst Ian Ing said Tuesday he expects Nvidia to benefit from Facebook ( FB )-owned Oculus Rift’s pledge to release more than 100 VR games by the year’s end. Oculus recommends graphics processing units (GPUs) from Nvidia or rival  Advanced Micro Devices ( AMD ).

Apple Pay Launching In China As U.S. Adoption Stalls

Loading the player… Apple ( AAPL ) Pay will be available in China beginning this Thursday, with the consumer tech giant facing stiff mobile payment competition in the world’s largest smartphone market from Chinese Internet heavyweights Alibaba ( BABA ) and Tencent ( TCEHY ). Alibaba’s Alipay is China’s most popular online payment service, while Tencent has integrated payments into its WeChat mobile messaging app, much like Facebook ( FB ). And amid concerns of slowing iPhone sales, a new study says that U.S. adoption of Apple’s mobile payment platform has plateaued. First Annapolis, an electronic payments consultancy, says that some 20% of iPhone 6 owners report using Apple Pay at least once, while 15% say that they use it regularly or frequently. While awareness among iPhone 6 owners remains high at 84%, the usage figures are slightly down from last year. In the U.S., Apple faces competition from Samsung Pay and Alphabet ( GOOGL )-owned Google’s Android Pay. Samsung Pay was launched last fall and works not only with NFC (near-field communication) terminals like the Apple and Android systems but also with magnetic stripe terminals and chip-card terminals, which could allow for wider adoption. Still, Piper Jaffray analyst Gene Munster said at the start of the year that Apple is “overwhelmingly the share leader” in point-of-sale mobile payments. He expects new features like peer-to-peer payments and in-browser integration to further boost adoption in 2016. Shares are looking to continue higher with a 1.2% gain Wednesday after jumping 3% in heavy volume Tuesday. Apple is still in a downtrend, a little less than 30% below its all-time high reached last April. Alphabet advanced 1.8%. Apple stock could also be getting a boost from reports on Tuesday that it received a car-related patent for a mobile device sensor to “determine when the user is in a vehicle that is driving.” The news has sparked new speculation that Apple — along with Google, Tesla Motors ( TSLA ) and others — is working on a self-driving car.

Oculus Rift VR Sales Pit Nvidia, Advanced Micro In GPU Battle

Facebook ( FB )-owned Oculus has pledged to release more than 100 virtual reality games by year’s end, a move that will buoy Tesla Motors ( TSLA ) partner Nvidia ( NVDA ), MKM analyst Ian Ing wrote Tuesday as he reiterated a buy rating on shares. Intraday on the stock market today , Nvidia stock jumped 3.2% ahead of the chipmaker’s scheduled fiscal Q4 earnings report. Late Wednesday, Nvidia is expected to report record-breaking sales, but earnings that fall for the first time in two years. For Nvidia’s fiscal Q4, the consensus of 29 analysts model $1.31 billion in sales, up 5% year over year, and 32 cents earnings per share ex items, down 9% vs. the year-earlier quarter. Three months ago, Nvidia guided to $1.3 billion in sales, plus or minus 2%. Analysts view $4.92 billion in sales and $1.05 EPS minus items for Nvidia’s fiscal 2016 — up 5% and down 6%, respectively, vs. fiscal 2015. Nvidia’s Q4 guidance implies a full-year outlook of $4.91 billion in sales. MKM’s Ing expects Nvidia to outperform its peers “in a challenging earnings season.” Other chipmakers have suffered Apple ( AAPL ) fatigue in December and ahead of the weak March quarter. “Nvidia remains our top pick based on strength in its core gaming business (58% of October quarter sales) plus abundant ‘call options’ where GPUs could become the ideal solution in coming years,” Ing wrote in a research report. Tesla, Audi, Volkswagen ( VLKAY ), Honda ( HMC ) and BMW use Nvidia graphics processing units (GPUs), according to a November Canaccord report. Continuing infotainment and autonomous-driver efforts will boost Nvidia, Ing wrote. With the release of the Oculus Rift VR headset in March, Nvidia and rival Advanced Micro Devices ( AMD ) are poised to “leapfrog each other” to supply gamers’ video cards, Ing wrote. The Rift website specifies the Nvidia GTX 970 or AMD R9 290. Pricing trends have been relatively benign lately, Ing wrote. Average sales prices for the GTX 980 and 970 are flat sequentially, with the GTX 960 down 1% quarter over quarter. All three are year-old cards. ASPs for the GTX Titan X are up 7% quarter over quarter with only three SKUs now available. “This suggests that demand is outstripping supply for these cards, which include scientific and academic applications,” Ing wrote. He expects prices to surge as Nvidia refreshes its Pascal series later this year. Ing reiterated a 39 price target on Nvidia stock. He noted that bears are “overly focused” on Nvidia gaming’s high exposure to China — about 40% of gaming sales in August. “Gaming growth is more driven by share gains against traditional entertainment consumption rather than macro,” he wrote. “We note that original equipment manufacturer sales were less than 10% of sales last quarter.” Nvidia stock surged 70% over four months between August and December. But shares have fallen lately, and Nvidia stock is now 24% off its 2015 high of 33.94 achieved Dec. 30.