NVIDIA Corp (NVDA)

tling (58.37) Submitted: 4/04/08 3:24 PM : Start Price: $18.90 NVDA Score: -34.94

Amazing how quickly stocks are forgotten... NVDA's lost almost half its value since hitting a peak in late 2007, driven by fears of rising cost and tighter competition from Intel and ATI (AMD). And I understand those fears, but they're overblown. Cost going up for NVDA means costs are going up for AMD as well. But unlike AMD, NVDA has room to cut margins; AMD doesn't anymore (look at their financials... deep in the red, and assets have shrunk as liabilities have grown since last year). Prices will have to go up for AMD, and NVDA can choose to stay put and continue asserting market-share dominance over AMD. Sure that will hit the margins, but they've already shown that they can hit analyst expectations despite the shrinking margins.





As for Intel, NVDA just offers a superior product. Yes, the masses still use Intel's integrated graphics chips, but NVDA will dominate for those who care about graphics. I know some people think, "oh, there's a recession, these people will revert to the cheap stuff"... well, think about this: after being exposed to DVDs, regardless of whether we're in a recession right now, how often do you find yourself still buying video tapes?





I'm not saying that the cost increases and competition won''t effect NVDA's performance... it should, and it has. But to be down 50% from October '07's highs and be back to 1 year ago prices (while having increased revenues by 33%!)? And a 14 P/E!?... and only twice the market cap of that money drain called AMD? That's unwarranted. Outperform on the gfx cards, while having additional upside throuhg establishing a foothold into the supercomputing industry.

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