Graphics-chip expert NVIDIA
So why did the stock drop by as much as 10% on the news? I think the evidence points to overheated expectations.
NVIDIA traded up something fierce in the days leading up to this report, leaving the stock down by just 4% despite Friday's freefall. The afterglow of January's cross-licensing settlement with Intel
As Gleacher analyst Doug Freedman puts it, "Investors need more growth avenues from current operations" to justify the current valuation. The company is in the midst of transforming from a pure-play graphics-chip wrangler into a mobile processor in the mold of Marvell Technology Group
Tegra 2 is the reference chip for the next generation of Android tablets, which sounds like a catalyst until you realize that Apple
You could pick up some NVIDIA shares on this drop if you believe in the transformation. This is a two-newsletter recommendation, so plenty of Fools might jump at this opportunity. Me, I'm not so sure. I do see it happening, but I'm in no rush to buy NVIDIA today. We'll see plenty more heart-stopping drops and daring climbs before this story plays out, and I think there will be better buy-in points.
Make sure you don't miss it when that happens. By adding NVIDIA to your Foolish watchlist, you'll be sure to catch the right wave when it comes in. This isn't exactly it, I'm afraid.