Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Force Is With NVIDIA

Leading graphic-chip maker, and Motley Fool Stock Advisor pick, NVIDIA (Nasdaq: NVDA  ) showed it is a force to be reckoned with when it reported fourth-quarter earnings, but an uncertain future gave analysts and investors reason to bid the stock down more than 16% following the release.

While NVIDIA reported a 37% increase in revenue to a record $1.2 billion thanks to its popular GeForce processors, focus was placed instead on a future that includes higher spending and increased competition.

Even a 57% increase in GAAP net income to $257 million and guidance that expects revenue in the next quarter to somewhat buck seasonal declines wasn't enough for Wall Street. With the looming threat of giants AMD (NYSE: AMD  ) and Intel (Nasdaq: INTC  ) developing graphics chips integrated with CPUs, investors and analysts worry that growth for NVIDIA's discrete graphics processor units (GPUs) may be threatened.

But NVIDIA CEO Jen-Hsun Huang sees the overall market for GPUs increasing as computing becomes more visually demanding. To maintain its leading position in the market and capture this growth, he said, the company will continue to invest heavily in technology to differentiate itself from very capable competitors.

To augment growth, NVIDIA is looking beyond its core market of high-end GPUs in desktop and laptop computers. One area that is a small part of NVIDIA today, but could be a large source of revenue in the future, is processors for smartphones.

Coinciding with NVIDIA's earnings release, the company was showing a new applications processor at the Mobile World Congress in Spain that includes a high-definition graphics engine alongside an ARM (Nasdaq: ARMHY  ) processor core.

Today, NVIDIA sells a relatively small number of mobile graphics chips to companies such as Motorola (NYSE: MOT  ) . But thanks to the glamour of the Apple (Nasdaq: AAPL  ) iPhone, the company expects smartphones -- and the demand for rich graphics on them -- to make up a larger portion of the market in the future.

While competitive pressure remains tough on NVIDIA, the company knows where it can succeed with significant advantages over alternatives. Huang has consistently shown he is well in tune with where the market is heading. So while the dark side clouds everything, and as impossible it is to see the future, this Fool still sees NVIDIA's destiny filled with ample growth opportunities.

Read/Post Comments (0) | Recommend This Article (13)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 579110, ~/Articles/ArticleHandler.aspx, 10/23/2016 4:31:34 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
NVDA $67.54 Down -0.19 -0.28%
Nvidia CAPS Rating: ****
AAPL $116.60 Down -0.46 -0.39%
Apple CAPS Rating: ****
AMD $6.52 Down -0.44 -6.32%
Advanced Micro Dev… CAPS Rating: **
INTC $35.15 Down -0.28 -0.79%
Intel CAPS Rating: ****
MSI $73.62 Up +0.05 +0.07%
Motorola Solutions CAPS Rating: ***