NVIDIA Corp (NVDA)

Nvidia is a solid company that due to a few unfortunate circumstances finds themselves valued at under 15 dollars. The stock is severely undervalued considering what happened to put them there:

1. Laptop Chip malfunction makes them take a 180 million dollar hit to fix it and then report lower earnings for the quater. NVDA is a smart company, they don't make mistakes like this, I wouldn't expect anything like this happening to them for a very long time.

2. AMD, which took over Nvidia's main competition (ATI) in 2006, pulls a fast one and instead of marketing a High end graphics card and then filtering it down to mid range and low range sister cards, as is the custom, decides to put all their product power behind a mid range card at an affordable price with a few low end and high end versions. It is a new strategy for AMD/ATI and is yet to show whether or not it will pay off, but it did accomplish one thing: Nvidia had to lower their card prices to a more competitive level subsequently lowering their earnings for the quarter.

3. For the first time since time began for Nvidia they missed a deadline. Nvidia has prided itself on always meeting deadlines and now that they have missed their first, Im sure the CEO will be pulling out all the stops to make sure it never happens again. Its just not in their nature.

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Reasons to Buy NVDA:
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1. The company has strong management that knows the tech side of the company just as well as it knows the financial side. They make smart investments and they learn from their mistakes. The management is known to be highly respected and extremely driven.
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2. NVDA has $0 debt and about 1.66 billion in cash to spend as it pleases. Thats pretty impressive, especially since they just announced adding 1 billion into their buyback plan which would boost it to a 2.5 billion buyback. A buyback is something to definitely watch on whether or not a company delivers but with Nvidia, they are more likely to deliver than not.
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3. Also, with all that extra money they have an incredible Research and Design department. They can do stuff like buy the AGEIA PhysX accelerator and incorporate that into NVDA products. PhysX software is widely adopted by over 150 games, is used by more than 10,000 developers of all types and is supported on Sony Playstation 3, Microsoft Xbox 360, Nintendo Wii and PC. And now to get it and its benefits, you have to have an Nvidia graphics card. Smart move I say, because as graphics in our age gets more and more lifelike, the physics engine and how it processes is at its core, and no other company has the industry standard built right into their products like NVDA now gets to boast.
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4. With the HD video movement blowing up right before our eyes, the demand for graphics power that can handle it increases. For the first time ever, an operating system (Windows Vista) has a substantial graphics requirement. Demand for quality products that can handle the load is going nowhere but up, and currently NVDA is the only one that can deliver to par. Not trying to trash AMD/ATI here, but as an owner of products from both companies, and then considering AMD's 7 quarters straight spiral down, Nvidia is the way to go.
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5. Did I mention the Sony Playstation 3 features Nvidia graphics and is considered in the gaming industry as top quality and power for graphics? In the next 4 years or so, Microsoft, Sony, and Nintendo will be looking to put out their new platforms. Who do you think they will get their graphics power from if they're trying to put out a powerhouse system? You betcha, Nvidia.
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6. Not many people know about it, but Nvidia will soon be the sole reason why you're going to kick yourself for buying an Apple iPhone. Dont get me wrong, the iPhone is truly a product a class of its own, but when Nvidia releases its Tegra series you will know who to call Daddy... Watchout is all I can say. I implore you, if you are reading this go to Nvidia's main site, look under products and go to mobile, and if you didn't already know about it, prepare to change you panties. http://www.nvidia.com/page/handheld.html check it out.

Apple - basically Nvidia is breaking out into the mobile market. It's about damn time too, Im already sick with apple and there release a product a year bull just because they can and everyone will buy it.. Oh look we're making this new one affordable and cheap, and hey its on the 3G network, just sign a contract that will eventually rape you given enough time and then lets rip off software developers and make them pay out of the ass just to have a piece of the iPhone... Funny thing is, the 3G iPhone is exactly the same as the first, the main highlight being, its on the 3G network. Guess what, the 3rd one is already way in the works and the 4th ones ink just finished drying on the paper...

Sorry I ranted. I really do like the iPhone as a product, but wouldn't it be nice if a company came out with something along that premise, but with as many top notch features as possible, instead of trickling out improvements and sucking the money teet dry. Which brings me back...

Tegra Series:
“All-day media processing” - for 130 hours audio, 30 hours HD video playback
• HD image processing for advanced digital still camera and HD camcorder functions (up to 12 megapixels still shots and can encode 720p video)
• Optimized hardware support for Web 2.0 applications for a true desktop-class internet
experience
• Display support for 1080p HDMI, WSXGA+ LCD and CRT, and NTSC/PAL TV-Out
• Direct support for WiFi, disk drives, keyboard, mouse, and other peripherals
• A complete Board Support Package (BSP) to enable fast times to market for Windows Mobile-based designs

"If you had a device that could run over, say, 50 hours of audio, and maybe 4 hours of HD video and still have enough battery life left to browse the web or do email for 10’s more hours, that starts to sound like a device that would get a lot more use.
The Tegra family of computers on chip have been designed from the ground up to deliver stunning HD video, imaging capabilities, desktop class 3D graphics and more in a tightly integrated solution that burns less than a watt during even the most demanding of uses."

Read a little into the history of this chip series. Think about one of the main companies behind small chip design for the Apple iPhone that made the device possible.. Guess what, remember that 1.66 billion in cash NVDA is sittin on, yeah they bought the damn company for a couple 100 million and came together to design a knockout. Also something very exciting, Nvidia is a Microsoft Embedded Partner. The windows mobile division at microsft is designing their new mobile operating system. Guess what its based off of? You guessed it, Nvidia mobile chip designs from the Tegra series. The new windows mobile is being packed full of features that take full advantage of Tegra capabilities.

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7.Take note that the Tegra Series is only one of many lines of exciting new and innovative technologies. Nvidia has made huge breakthroughs in how scientists do visual computing research on say for example black hole simulations or folding of protein strands.
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In Closing:

At 14-16 dollars NVDA is a great buy, at 12-14 its a bargain. If you see it drop into the 10 or 11 range, thats a steal, dont think, just buy. For reasons discussed earlier we have the opportunity to buy a great company at discount prices. Im calling it now, NVDA will reach that $40 per share mark again. It may not be this year, it may not be next year, but it will happen... Wouldn't that be nice if you invested now while they're so cheap?

Please, all comments are welcome, I hope you enjoyed my little rant.
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PS. At NVISION08, which is a huge convention hosted by Nvidia for Industry experts and Nerds alike, it is speculated that new light will be shed on the Tegra series and its consumer availability. On the short term I wonder what that will do to their stock prices in the next couple of weeks... Good thing I already bought them at 11. Im seriously considering buying more. The point of the article, you should too, what are you waiting for?

Based on lowered earnings targets and higher operating expenses, I'd say that NVDA will underperform in 2008. I don't think ESA or the SLI architectures will significantly improve sales. I like NVIDIA products because they have good linux drivers but I don't think the overclocker and gamer markets to which the above products are geared will significantly improve revenue even though they are aggressively marketing to the budget user.

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.

Nvidia is the 800-pound gorilla of the GPU market. They are number one in both desktop and laptop and they are now expanding to professional markets. In any kind of graphics application that requires performance, they have the top product. They are in the Sony Playstation 3 and the iPod Video. They have been named by Forbes as the Company of the Year 2007, based on their 5-year sales and EPS growth rates and stock performance (42% CAGR at the time of publication), profit margins, balance sheet, as well as their management quality. Likewise, Business Week has named them one of the top 50 performers of 2007 (49th overall), i.e., the top semiconductor company in the world, based on sales growth and ROIC.

As spectacular as their growth has been thus far, they are even more enthused about the upcoming years, in which they think the GPU is going to be the focus of the era of visual computing. The CPU will not be required to be ever faster and efficient, they feel that current CPUs, even low-end CPUs, are plenty good for most users. Instead, most of the resources and investments in time and efforts and $$$ will be alloted to the GPU. They think Windows Vista will unleash a “tidal wave” of 3-D apps that will be greatly enhanced by GPUs, which will off-load the CPU of graphics tasks.

They know very well they are the top dog and are not at all worried about ATI or Intel taking some of the market share from the low-end markets by offering a little more value. They are very confident that there is a substantial performance difference between their top products and the competition’s. In fact, reading the FY08 CC transcript, they really don’t care a whole lot if they lose one or two percent of market share to the competition because they think that the GPU market is simply flourishing. They feel they are capturing even more market share anyway. They made this point multiple times during the CC.

Financially, they had set a goal to achieve 47% GM. They have steadily increased their GM each of the last 3 years: 38.2%, 42.4%, 45.7%. They have also steadily improved operating margins, which jumped almost 6% from FY07 to FY08 (!!). Due to all these efficiencies, EPS improved by 72% in the last year, versus a 33% increase in sales, which BTW have accelerated and grew by 33% last year. The stock is down due to the bear market that started in November and because they guided for higher operating expenses (10%) in Q1 in order to absorb a small company they have just acquired. Even though they have said the GPU market is so strong that they expect less than normal seasonality going from Q4 to Q1. They said revenues will decline less than 5% from Q4. So if I assume 5% decline in revenue from Q4, flat gross margin, and 10% higher operating expenses, I get at an operating income of $198.5 million for Q109 (their FY ends in Jan.). In Q108 they had oper. income of $141.3 million. That would be be an increase of 40% YOY. Then assume a 17% tax rate and you get at a net income of $164.5 million. These conservative assumptions (they guided for *less* than 5% decline in the top line and flat to slightly higher GM’s) yield a ***24% increase*** in EPS over Q108 and a 35% increase in the top line!! This for a company that is priced at a P/E of < 15. I don’t understand how some analysts have said the growth for the year will be in the single digits or worse, none at all. The compay has already conservatively guided for 20% top-line growth in FY09. To me, that sounds like underpromising and overdelivering, a-la Garmin. If they achieve a 20% increase on the bottom line and get a P/E of 20 they will be priced at $31.44, a 63% gain from here.

Oh that makes me mad!

A 30% drop was totally uncalled for! The whole sector and economy at large is hurting, you can't blame NVDA for being honest and admitting it's going to shave 15% off their sales, like everyone else this quarter. The $150M mfg error, well, that's a shame, but it's a one-time charge.

In three months, the economy won't improve, but I trust them to not screw-up on that scale again, and that alone should put them up 15% from where we are today. Factor in ATI who aren't doing well either as their only competition and the fact that Nvidia products are top-drawer, and I'm thinking we'll be back at $20 in 12 weeks.

But first, I expect another 5-10% drop from sector pressure, S&P pressure and the $USD declining, so buy at $10.

Poor Nvidia, never rains but it pours. Now they know how AMD/ATI felt last year...

Market Strength:
Other major competitor is ATI, owned by AMD. That company is not doing so well. Their video processors are high quality and well respected, and the demand for video processors are increasing every year.

Company:
The company is strong. It has had consistent returns for the past ten years, and its Return on Capital is high. This stock is a long term keeper.

Price:
This is still a good price to jump in.

These graphic cards offer a little less bang for your buck than ATI, but they are ridiculously more stable and much more widely used. You're paying extra for quality control when you buy one, and that's important when crashing, instability, and buggyness are out of the question for hardcore gamers.
The stock is now at a great price, and NVIDIA's development of powerful GPU's is bearing fruit, giving huge potential for the future. This is a win-win. Buy, hold, and enjoy.

Nvida has several things working against them. Integrated graphics chipsets are becoming more capable of handling graphics intensive tasks. Even gaming is now in reach. AMD/ATI and Intel will own this space.

The price competition in discrete graphics cards is more aggressive than ever and I don't see this easing with integrated graphics taking larger and larger shares of new computer purchases.

With the merger of AMD/ATI, Nvidia and Intel should have become closer than ever. Instead, Intel and Nvidia are at each others throats. I see Intel successfully invading Nvidia's space with integrated graphics, but Nvidia failing in their attempts to invade Intel's space in CPUs.

Nvidia may have some room to grow in the mobile space and super computing, but I see the rest of their business on a slow inevitable decline.

With ATI getting bought by AMD, I see them (ATI) giving up the ultra high performance video cards for more integrated and mainstream faire. This is actually a big positive for ATI, AMD, and Nvidia. NVidia can continue to dominate the high end, trickle down into the mainstream, and let ATI have the integrated (read mobile) market. I honestly thought that NVidia would have been a better purchase for AMD, and ATI with intel. NVidia is better off on its own. I still cannot believe that ATI allowed the buyout for such a small premium.

Nvidia is very cyclical. Over the next 10 years, I expect business performance to be volatile at times. However, the earnings trend line will be up. I don't know what year to year earnings will look like, though. To time the industry peaks and troughs is a pursuit of the wind. Therefore, I believe it is best to wait for cyclical troughs to pick stocks such as Nvidia to outperform. Cyclical troughs provide the CAPS player (or investor) opportunities to maximize score points and increase the odds of being accurate.

Nvidia is the industry leader in gaming graphics cards. Gaming is in a strong upward trend that will not slow until sometime after the video game industry has overtaken other forms of entertainment. I am very bullish on just about anything related to video games. I do think Nvidia is a risky investment proposition, but based on my starting price, I believe this call should yield a healthy amount of score points in the future.

This company is one of 62 listed on the BetterInvesting Growth Screen in January 2008. It met 4 criteria: it is projected by Value Line to double earnings in the next five years, has actually doubled earnings in the past 5 years, is selling at price-earnings multiples (P/E’s) that are 110 percent or less of Value Line’s projected earnings growth rate and has a safety rating of average or better. It was listed in the March 2008 BetterInvesting magazine.

Sales growth rates gave been increasing over a 5 year period, and are %6 higher than the industry average.

Nvdia is still at the top of the graphics card market, and there are no indications that this will change. Right now this stock is trading near it's 52 week low, and is a value buy at that price.

What a volatile stock! Not for the faint of heart if you can't take daily swings of $2 or more on relatively no news. As a true long-term investment (1 year or more), I think this is one of if not THE best chip stock to own.

Now that ATI has been bought by AMD, NVDA is the only independent gaming/multimedia GPU maker left. Also, it makes very nice chipsets. I have an NVDA chipset and NVDA GPU-based graphics card in 3 out of 4 of my home PCs.

While you can certainly find more stable stocks to own, and NVDA will probably drop a few bucks in the short term before it rises about today's levels, I think long-term this company is a sure thing. Barring a market crash, NVDA should make an easy 15-25% return over 1 year.

Sue by Rambus, losing market share to ATi due to poor VGA card pricing and lower than expected performance, notebook video card recall etc, whole technology market is down etc...

Too many negative issue now, probably will continue to struggle until early next year. Have potential next year, but just dont know where is the bottom for this year.

oversold on overreaction to 0.5% decline in gross profit margins. The decline was attributable to a manufacturing error on one of its chips, which has since been corrected. Guidance was better than expected for FY08, revenues up 30 something percent, and NI up over 50%. $23 is less than what it was at the start of 07.... great time to buy.

ATI and Intel are providing harsher competition, but NVIDIAs chipsets are waaaay beyond their competitors in capability, and they haven't even begun to truly utilize the advances of pci 2.0 express slots. They are still making a killing in the high end performance on the 8800GTX line, and just introduced the 8800GTS 512, which is the first to use the pci 2.0. Entering more and more world markets, including S. Africa. They should be fine, and at this price... watch out!

Short term is going to be rough, but it seems to have stabilized a bit intraday, and this is about where it has support.

They have a dominant position making graphics cards and they continue to innovate to ensure their position. And that position will keep rising due to strong demand. Gamers are a consistent growing demographic who are buying the latest and greatest every year or two. As the latest trend is to install multiple graphics cards into a single system, so expect their sales to multiply! Also, operating systems and software in general are becoming increasingly graphics intensive as the software makers focus on their GUI. I don't expect Vista to do much, but Windows 7, various Linux builds like Ubuntu, and Apple software products should be very big in the coming years.

Anytime is good to buy into a great company like Nvidia but we are even near a 52 week low! I suppose some are still frightened after the credit "crisis" but I promise there's nothing to worry about. NVDA doesn't have a financing department!

At the very least, NVDA will shoot through the roof when it's bought out by Intel or the like. I'm buying into this company for real. If only I had had the cash during April...

I trust in nvidia...

Nvidia has done very well with their GeForce and Quadro video card series--their top competitor being ATI (currently owned by AMD) with their Radeon and FireMV series, still just out of reach of Nvidia.

Nvidia is now on the brink of unveiling their new mobile processors for handhelds: smartphones, portable media players, ultra-mobile PCs, etc. With these new products released and added to their "repertoire", and with summer just around the corner, it should be enough to push them far into the lead.

Besides, how much longer can ATI (Nvidia's only competition) do well when AMD (ATI's owner) is doing so poorly?

Married to what are in my opinion the best PC motherboards around, nVidia and Asus would be excellent long-term tech picks in my opinion. nVidia is always on the bleeding-edge of graphics processing, and we all know what gamers want. This is a bit of a big risk for me, but I don't' have a financial position in the stock. I haven't taken the time to analyze the companies financials, so I'm strictly basing this decision on the company's desire to innovate, and lead the pack.

NVDA has formed a nice cup with a handle pattern and is showing strength the past week. I predict it will reach $35 in 3 to 4 weeks. The semiconductor sector appears to be gaining strength.