Tags: Nividia | dynamic | competitive | NVDA

Nividia at Forefront of Dynamic, Competitive Industry

By    |   Wednesday, 11 July 2012 10:14 PM

Nividia (NVDA) sits at the forefront of a dynamic and fast-paced industry, helped to set the standard for high-quality visual displays on increasingly tiny tablet and smartphone screens as well as on workstations used by designers and scientists alike. Yet it’s part of a highly competitive, tightly packed field of suppliers to technology makers who struggle to maintain margins in a weak global economy.

Nividia has long created the graphics chips used in personal computers that bring games and home movies to life. The firm has branched out into energy-efficient processors that power a range of products from smart phones to supercomputers. NVDA mobile processors are used in cell phones, tablets and auto infotainment systems.

“PC gamers rely on its processing units to enjoy visually immersive worlds. Designers use them to create visual effects in movies and to design everything from golf clubs to jumbo jets. Researchers utilize GPUs to push the frontiers of science with high-performance computing,” management said in a recent filing. “NVIDIA has nearly 5,000 patents granted and pending worldwide.”

NVIDIA solutions are based on two technologies: the graphics processing unit (GPU) and the mobile processor. Designed by NVIDIA engineers, they manufactured by a third-party chip foundry.

NVDA has three GPU product brands: GeForce, which creates realistic visual experiences for gamers; Quadro, used in visual computing by designers and digital artists; and Tesla, which accelerates applications for scientists and researchers.

Mobile processors incorporate central processing unit (CPU) and GPU technologies to deliver an entire computer system on a single chip, management explained.

“Modern mobile processors possess significant computing capabilities yet consume one hundred times less energy than a typical PC,” they said. “Tegra is our mobile processor and is built for applications ranging from smartphones, tablets and notebook PCs to televisions and cars. We believe energy-efficient mobile computing will transform how computers are used in our lives. Tegra is a major new growth business for us.”

Nividia has a market cap of $7.93 billion in a sector, semiconductors, where the average company size is $7.41 billion. Its trailing 12-month P/E ratio is 15.45 and its five-year projected price-to-earnings-growth (PEG) ratio is 0.98, compared to 1.49 for the sector.

Its projected earnings per share growth for the coming year is 30.99 percent, compared to a sector average of 34.53 percent.

Increased competition

Analysts are bullish on NVDA, with buy or outperform calls from Needham & Company, Friedman, Billings, Ramsey & Co., RBC Capital Markets, Oppenheimer & Company, Standard & Poor’s Equity Research, UBS, and Cantor Fitzgerald.

“The company expects to benefit from the integration of the new Tegra 3, and a strong growth in the notebook segments. Moreover, NVIDIA’s performance may be tempered slightly by the economic slowdown in Europe,” Zacks Investment research analysts wrote May 15, setting a $14 price target but a neutral rating on the stock.

“Again, advanced chips developed by Intel Corp. (INTC) and Advanced Micro Devices Inc. (AMD) may increase competition for the company.”

Nividia next reports on Aug. 9.

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Wednesday, 11 July 2012 10:14 PM
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