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Nvidia at a Crossroads

Under pressure from Texas Instruments and Qualcomm, Nvidia needs to boost its chip sales.



) --


(NVDA) - Get NVIDIA Corporation Report

is at a crossroads. Under pressure from rivals

Texas Instruments

(TXN) - Get Texas Instruments Incorporated Report



(QCOM) - Get QUALCOMM Incorporated Report

, the company desperately needs to get more gadget makers using its Tegra chips.

Nvidia, which

reports its second-quarter results this week

, has seen its stock plunge more than 50% this year amid global economic weakness and concern about Tegra uptake.

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"Investor patience is running thin," explained Doug Freedman, an analyst at Gleacher & Company, in a note released on Tuesday. "With high-volume design wins lacking and Texas Instrument's OMAP and Qualcomm's Snapdragon

chips continuing to win slots on flawless execution, the timing of a foreseeable (and material) turn-around is critical."

Aimed at smartphones and tablet computers, Nvidia unveiled Tegra in 2008, and

showcased the latest version of the technology at CES earlier this year.

Although Nvidia is working with companies like


in the tablet space and firms like


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on smartphones

, Wall Street is keen to see more Tegra partners.

"We believe Nvidia should focus its call on addressing a jumpstart strategy for Tegra, which could include organizational changes," wrote Gleacher & Company's Freedman. Nvidia, he adds, should also improve Tegra's software architecture.

Nvidia reported better-than-expected earnings in May but gave weak second-quarter guidance, prompting


about the stock's rebound potential.

The company's recent decision to


its second-quarter numbers may at least provide investors with some cushion.

Nvidia predicted second-quarter revenue between $800 million and $820 million, well below its initial range between $950 million and $970 million. The company blamed the revenue shortfall mainly on its consumer GPU business, which was impacted by increasing memory costs and economic weakness in Europe and China.

"Markedly subdued expectations post pre-announcement could at least buoy Nvidia's current stock price," explained Freedman. "A low bar has been established."

Others have struck an even more bullish tone on Nvidia's prospects. With a host of new products slated for later this year,

and more efficient production

potentially opening the door to better margins,


Jim Cramer recently said that there could be value in Nvidia's shares.

Investors, however, are clearly still nervous about Nvidia's prospects. The company's stock dipped 43 cents, or 4.46%, to $9.21 on Tuesday, outpacing the broader retreat in tech stocks that saw the Nasdaq fall 1.37%.

-- Reported by James Rogers in New York

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