This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Nvidia's Backing Its 'Big Game' Talks

Stocks in this article: NVDA BRCM QCOM INTC

NEW YORK ( TheStreet) -- Each time Nvidia (NVDA) is discussed it's always in the context of the company's ability to change its chip strategy.

The Street doubts Nvidia can successfully transition itself from a PC-dependent graphics chip company to one that can compete on the big stage with Qualcomm (QCOM) and Broadcom (BRCM) in the realm of mobile devices.

However, management has shown it has a "chip on its shoulder" in more ways than one. The company has made clear it doesn't appreciate the bets that have been placed against it. In fact, during the company's fiscal fourth-quarter earnings report in February, during which Nvidia posted increases of 16% and 36% in revenue and profits, respectively, CEO Jen-Hsun Huang said, "My expectation is that we'll gain market share this year or we'll continue to gain market share this year."

Companies don't often go out of their way to raise expectations and put undue pressure on themselves without knowing they can back it up. Nevertheless, in such a highly competitive chip market -- where rivals want nothing more than to put each other out of business -- Nvidia investors were eager to learn what the next quarter would bring. The company didn't disappoint.

Amid all of the PC-related doom, which continues to weigh on rivals including Intel (INTC), Nvidia delivered as solid a performance as could have been expected, beating estimates on revenue and earnings per share. For that matter, on a year-over-year basis, there wasn't much to complain about. Not only did revenue advance 3% year over year to $955 million, but Nvidia's GAAP EPS of 13 cents was 30% higher year over year.


As noted, despite the 13% decline in global PC demand that was reported by IDC, the fact that Nvidia's graphics processing unit, or GPU, posted an 8% increase in revenue was impressive. Not only has the company been "talking a big game" but consumers seem to be buying into Nvidia's industry-leading graphic chips, which are predominantly used in gaming.

Management also backed up its prediction in profitability. Non-GAAP gross margins advanced more than 4% year over year to 54.6%. On a GAAP basis, the percentage move was the same, though slightly lower in absolute by 30 basis points. The better-than-expected performance was partly attributable to lower Tegra sales, which means that management is eating up the costs associated with developing Nvidia's mobile strategy.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,886.84 +82.04 0.46%
S&P 500 2,073.11 +2.46 0.12%
NASDAQ 4,775.3640 +9.9840 0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs