It's been a rough couple of months for NVIDIA (NASDAQ:NVDA). Recent reviews show that Advanced Micro Devices (NYSE:AMD) has put together a formidable new series of graphics cards that not only go toe-to-toe, but beat NVIDIA in performance per dollar.

Back-and-forth performance battles like these are common, and probably won't shift the market-share needle too much further in AMD's favor. However, of greater concern are the company's legal headaches with Intel (NASDAQ:INTC). Due to a continuing legal spat, NVIDIA is ceasing development on chipsets of Intel's latest microprocessors. The quarrel puts NVIDIA's most profitable business unit from last quarter at risk of falling behind the competition.

So NVIDIA could use a bit of a hug right now, and who'd be better than a kind-hearted plumber with a heart of gold and wicked fireball power? That's right, Mario to the rescue.

Bust out that Tanooki Suit, NVIDIA
According to the website Bright Side Of News, Nintendo (NYSE:NTDOY.PK) has picked NVIDIA's Tegra computer-on-a-chip to power its next-generation DS handheld. While the news can still be filed under the "speculative" category, it once again highlights what's at stake for the company in the mobile realm.

NVIDIA realizes that computers are increasingly being sold in smaller form factors that don't need as much graphics power underneath the hood. This poses a great threat to its graphics cards, which are found most commonly on expensive PCs and notebooks. To help combat this change in buying habits and diversify its business, NVIDIA recently moved into mobile processors.

A fantastic opportunity: Don't blow it
While it's difficult to nail down exactly how large a market mobile processors and computers-on-a-chip constitute, there's no doubting this is a growth market with enormous potential. The chips are aimed at high-growth areas such as smartphones and other small convergence devices that aim for PC-like experiences in devices a fraction of the size.

Even with projections of soaring sales of smartphones and other powerful mobile devices, the success of Tegra isn't assured. It faces off against powerful competitors such as Texas Instruments (NYSE:TXN), Qualcomm (NASDAQ:QCOM), and others. NVIDIA scored a major victory by signing up Microsoft (NASDAQ:MSFT) as its first customer, but while the Zune is a great introductory product to show off Tegra's chops, the next-generation DS should deliver significantly more volume. Achieving a significant product like this will help NVIDIA in its quest to out-duel the big boys for other high-volume smartphone contracts.

Foolish takeaway
Investors should still show caution, because this is an unconfirmed report. However, it does highlight Tegra's potential. NVIDIA has boldly predicted that Tegra could make up 50% of its revenue in the long term. Score a couple of big product victories, establish a foothold in the fast-growing portable-devices market, and that figure starts looking more realistic.

For investors tired of the stomach-turning ups and downs of the PC semiconductor industry, Tegra could be just the tonic needed: a product aimed at a market that's going up while PC sales wane. It's your golden ticket to a future of growth, NVIDIA; don't blow it.

Care to disagree on Tegra's potential? Think NVIDIA has more to gain elsewhere? Have at it in the comments box below!