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
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Nvidia's Backing Its 'Big Game' Talks

This cost absorption has affected Nvidia's near-term margins and is one of the reasons why the Street continues to have doubts about this company. For instance, although the overall sales numbers look solid, the fact that Tegra revenue declined 22% year over year sticks out like a red thumb. The good news is this strategy has worked as well as can be expected. Not only is Nvidia's Tegra line of chips gaining traction, but the costs to grow market share have not adversely impacted the company's operating margin.

Management understands what's at stake regarding mobile market share. Plus, Nvidia, which is still dependent on PC sales for roughly two-thirds of its revenue, has been working hard to broaden its portfolio. To that end, the Tegra line of mobile processors, which is a system-on-chip (SoC) that integrates many of the features of the ARM architecture into one package, has taken a major focus.

As it stands, outside of the Nvidia investment community, Tegra is not as wildly known as Qualcomm's Snapdradon or Broadcom's line of BCM LTE chips, but Tegra is gaining meaningful ground. Here again, during the conference call, Nvidia's management pulled no punches, saying the company's Tegra 4i "delivers three times higher performance than Qualcomm's S400 solution."


What's more, Nvidia continues to secure business some prominent companies including Microsoft (MSFT) and Google (GOOG) where the Tegra is a key component inside both Surface and Nexus 7 tablets. Device manufacturers are beginning to realize Tegra's features such as low power consumption coupled with high performance makes this series one of the best chips on the market today.

Bottom Line

If Nvidia can maintain revenue growth rate of 5% while also growing its Tegra market share, this company can become a legitimate competitor to Qualcomm and Broadcom in the next couple of years.

Accordingly, expecting the stock to trade in the $18 to $20 range over the next 12 to 16 months is not unrealistic. Despite Nvidia's 20% year-to-date gains, I think the stock is worth a gamble here for the long term. The risk-reward trade-off still favors holding.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Stock quotes in this article: NVDA, BRCM, QCOM, INTC 
Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.

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.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

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