NVIDIA (NVDA) Shows Momentum: Is it Part of Your Portfolio? - Analyst Blog
NVIDIA Corp. (NVDA) is well set on the growth trajectory, gathering momentum from its positive earnings surprise history and strong fundamentals. Also, shares of NVIDIA have posted one-year return and year-to-date return of 27.1%.
NVIDIA delivered positive earnings surprises in the last four quarters with an average beat of 34.2%. This Zacks Rank #2 (Buy) company has a market cap of $11.18 billion with long-term earnings growth expectation of 10.3%.
Over the last 60 days, 13 out of 15 estimates for NVIDIA were revised upward for fiscal 2015. The Zacks Consensus Estimate for fiscal 2015 increased 3.9% to $1.06.
Recently, NVIDIA reported better-than-expected third-quarter fiscal 2015 results, primarily backed by lower operating expenses as a percentage of revenues and higher growth in Tegra Processor, SHIELD tablet sales, GeForce GPU and Tesla sales.
Some of the optimism related to NVIDIA shares may be attributed to the higher adoption of its Tegra processors. Recently, Honda Motor Co., Ltd. (HMC) announced that it is set to launch an in-dash Infotainment System powered by NVIDIA’s Tegra mobile processor.
Prior to this, Google Inc. (GOOGL) selected NVIDIA’s Tegra K1 processor to power its Project Tango tablet development kit, which will help developers build applications featuring 3-D mapping and sensing capabilities. Moreover, Xiaomi, a leading Chinese mobile device manufacturer launched a tablet powered by TegraK1 processors.
The energy-efficiency of Tegra K1 is likely to be a competitive differentiator, driving its adoption and giving competing devices from Advanced Micro Devices, Inc. (AMD) and Intel a run for their money.
Furthermore, NVIDIA’s focus on GRID platforms can increase GPU adoption in data centers, giving it an advantage against its competitors. NVIDIA GRID is a powerful GPU-based platform that supports corporate virtualized desktops in data centers, cloud gaming services and design software-as-a-service.
Moreover, in a recent investor briefing session, NVIDIA shared its plan for future growth and the new devices that it is planning to launch to win more customers. The company claims that it is making strategic moves to expand its GRID for Enterprise Virtualization with approximately 500 million enterprise workers. Management also emphasized that the NVIDIA GRID will now be available on 50 server platforms. We believe that NVIDIA’s GRID enterprise virtual graphics, which improve the visual effects of games, will help in future revenue and margin growth.
We believe that NVIDIA’s innovative product pipeline consisting of the recently introduced SHIELD 2, mobile processor Tegra K1 and GeForce GTX 980 for desktops and mobiles will boost top-line growth. Moreover, strength in gaming and high-end notebook GPUs is the other catalyst, going ahead.
As things stand now, we believe that NVIDIA’s innovative product pipeline consisting of the recently introduced SHIELD 2, mobile processor Tegra K1 and GeForce GTX 980 for desktops and mobiles will boost top-line growth. Moreover, strength in gaming and high-end notebook GPUs is the other catalyst, going ahead.
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