NVIDIA (NASDAQ:NVDA) is an incredibly complex company. The reality is, getting a grasp on a field like graphics processors takes quite a bit of dedication. We've compiled a premium research report that digs into the company. Here you can review a quick "cheat sheet" that lists three reasons to both buy and sell the company to help hone your research. We hope you enjoy this sample of our report.
3 reasons to buy
- The Tegra mobile chip business continues to put up healthy growth and gain traction in the marketplace, particularly among high-profile tablets like the Nexus 7 and Surface. Within a relatively short period of time, NVIDIA has already established itself as a force to be reckoned with in mobile applications processors.
- NVIDIA's professional-grade GPUs continue to gain traction in supercomputing applications, which is a new opportunity for NVIDIA to gain exposure to cloud computing. This is a threat to Intel, whose processors have historically powered supercomputers, but could be a boon to NVIDIA's results.
- The structure of the GPU market favors incumbents, due to high barriers of entry tied to heavy research and development costs. AMD is NVIDIA's primary competitor in the discrete GPU market, and remains in turmoil amid a significant restructuring that entails laying off 15% of its workforce. NVIDIA should be able to capitalize on its rival's missteps in its most important sector.
3 reasons to sell
- NVIDIA's overall performance still relies heavily on the GPU segment, and the broader PC market remains weak in the face of mobile device adoption. GPU sales comprise 63% of trailing-12-month sales and its growth has been inconsistent due to the mature PC market. Last quarter, GPU sales rose just 5% year over year, after a 9% decline the quarter prior.
- Eventually, integrated graphics performance could satisfy most average PC buyers, a threat to NVIDIA's core GPU business. Thus far, NVIDIA has weathered this concern rather well, but it could see discrete GPU sales come under pressure as integrated graphics performance continues to improve and provide a "good enough" alternative.
- NVIDIA is a small player relative to heavyweights like Qualcomm, Intel, and Samsung, and challenging larger players with more resources and experience may prove unsuccessful. For example, Qualcomm's chip business saw sales of $2.9 billion last quarter, over 15 times NVIDIA's CPB segment that includes Tegra and Icera. Intel is making a big push into smartphone processors with its Atom chip and is No. 2 in the baseband market behind Qualcomm.
Evan Niu, CFA, owns shares of Qualcomm,. The Motley Fool recommends Intel and NVIDIA and owns shares of Intel Corp and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.