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



NVIDIA Slowly Chips Its Way Up

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Buoyed by a jump in revenue, NVIDIA (Nasdaq: NVDA  ) managed a quarterly profit, but its shares fell 4% on weakness in its mobile business. The chip maker also said it expects third-quarter revenue to grow 4% to 6%.

Let's take a look at what lies in store for NVIDIA.

A look at the quarter
Revenue for the quarter jumped 25% to $1.02 billion from $811.20 million in the corresponding quarter a year ago, driven by strong sales of its notebook graphic chipsets. This places the company above its nearest rival, Advanced Micro Devices (NYSE: AMD  ) , whose revenue declined by 5%. The company produced an operating income of $182 million as compared to the loss of $175 million incurred a year ago. NVIDIA witnessed stupendous growth in its market for notebook graphic processing units and now controls a market share of 50.6% in this segment.

Although the market for desktop chipsets experienced cyclical weaknesses, the notebook segment helped the company keep its head above water. NVIDIA is optimistic about consumers shifting toward portable computing, and it is focusing its energies toward this segment.

Winning designs
Smartphones are turning into "superphones" thanks to faster processors and graphics. NVIDIA seems to have just the right product for this platform. The company has seen some major design wins with Samsung, LG, and Motorola (NYSE: MMI  ) for its Tegra processors that are used in tablet PCs and smartphones.

Android revolution
Android-enabled phones currently make up 40% of the smartphone market share in the U.S., with shipments still on the rise. With unit sales of smartphones rising, it can be expected that the company will sell more of its chipsets to the manufacturers and generate more revenues in the future.

Furthermore, Google's (Nasdaq: GOOG  ) recent announcement of acquiring Motorola bodes well for NVIDIA since the company supplies graphics processors to Motorola's devices. With the promise of a "supercharged" Android platform, one may expect this deal to give NVIDIA good mileage in selling its chips once the phones are rolled out.

The Foolish bottom line
NVIDIA has raised its outlook for the rest of the year and sees revenue above Street estimates in the third quarter. Given its recent run of positive results and growth in business, it makes for an interesting investment proposition. I see no reason to shy away from the company.

To stay on the trail of NVIDIA's developments, add it to My Watchlist.

Fool contributor Harsh Chauhan doesn't own any shares in the companies mentioned in this article. The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of NVIDIA and Google, as well as writing puts in NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (5)

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: 1550198, ~/Articles/ArticleHandler.aspx, 10/22/2016 12:28:12 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 15 hours 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: ****
AMD $6.52 Down -0.44 -6.32%
Advanced Micro Dev… CAPS Rating: **
GOOGL $824.06 Up +2.43 +0.30%
Alphabet (A shares… CAPS Rating: *****
MMI.DL $48.08 Down -1.05 +0.00%
Motorola Mobility… CAPS Rating: *****