Will Smartphones Lead NVIDIA to Gains in 2013?

While NVIDIA (NASDAQ: NVDA  ) didn't have tremendous gains in its share price in 2012, the company still performed admirably. Consider its performance versus rival AMD, for example: AMD saw sales plunge 25% last quarter while NVIDIA grew sales 13%.

Can NVIDIA use Tegra gains in smartphones next year to offset PC weakness? In the video below, Motley Fool senior technology analyst Eric Bleeker takes a look at three areas that will determine NVIDIA's success in smartphones -- not just across 2013, but the years ahead.

Fool co-founder David Gardner first sniffed out NVIDIA in 2005 and it's just one of the stock picks he's made that's led to his stocks racking up 120% gains in our Stock Advisor service since it launched in 2002. Those returns have beaten the market by more than 91%. David has managed to trounce the market by always being on the lookout for revolutionary stocks and recommending them before Wall Street catches on to their disruptive potential. If you're interested in how David discovers his winners, click here to get instant access to a personal tour of David's Supernova service.


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  • Report this Comment On January 05, 2013, at 10:55 AM, rsinj wrote:

    Nvidia has been the performance champ and continues to be. Their processors span the gamut of phones, PCs, tablets, and supercomputers. No other competitor can say that, and none other does it as well.

    Nvidia was smart enough to see the smartphone era in the future and is now two to three years into what had been a nonexistent market for them. Their designs are innovative (e.g. quad core + fifth core for power regulation) and even though a number of vertically integrated companies are designing in-house as stated in the video, it is typical of a build or buy decision process. Those who are big enough to design in-house, do it at a low enough cost and good enough performance will do it. However, as with most outsourcing types of arrangements, companies like Apple, Samsung, LG, etc. do not have their strengths in processor design/manufacturing. Companies like Nvidia and Intel are better suited for the task, because that's what they make their living doing - being the best at what they do and as a result will most always have better performance, and lead the in-house guys technologically.

    For those manufacturers who do go at it alone for smartphones, I don't think it is a major loss for Nvidia. That market is near maturity/saturation and so the focus will be trending towards production at lower cost. Nvidia pricing for smartphone processors is ridiculously cheap already if you look at what they do. So, my guess is that new designs are going to move up a notch, and be targeting towards the tablet market. The tablet segment is still in its infancy, is ripe for lots of advances and growth, and there is still some room for pricing flexibility. All of this plays well into Nvidia's hand.

    Lastly, when we discuss Nvidia as a stock/investment, there are very few companies as undervalued based on performance, growth prospects, strength of the balance sheet, and as a result the potential of a takeover candidate.

    As far as David Gardner sniffing out Nvidia in 2005, blah, blah, blah...so many things can be said about that, it's not worth the effort.

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