NVIDIA (NVDA -1.99%) is set to release its fourth-quarter earnings on Feb. 12, and analysts expect the company's mobile business to continue to drag down results. A strong gaming PC market should help, but new products from rival AMD (AMD 1.14%) may have reduced NVIDIA's market share during the quarter. While earnings will likely fall considerably compared to last year, NVIDIA's enterprise businesses should continue to grow rapidly. Here's what to expect from NVIDIA's earnings report.

What analysts are expecting
Analysts expect EPS to decline significantly in the fourth quarter, falling to $0.18 from $0.28 in the same quarter last year. EPS also declined on a year-over-year basis in the third quarter, driven by a large decline in revenue from the Tegra division, and this trend is expected to continue. Revenue is expected to decline by 4.9% year over year for the quarter.

Full-year EPS is expected to be more than 25% lower than last year, again due largely to the Tegra division. Tegra 4 began shipping during the third quarter, but the line of mobile chips has yet to gain any considerable market share. The next iteration of the chip, the Tegra K1, was announced in January and is set to begin showing up in devices later this year. The Tegra division is still unprofitable for NVIDIA, and this continues to drag down earnings for the company.

A strong gaming business
While the PC market as a whole has been declining, the gaming PC market has been extremely resilient. Through the first three quarters of 2013, NVIDIA's GPU revenue is up 4% year over year, even as the PC market has declined by about 11% in that time. The strong performance of NVIDIA's GeForce gaming GPUs, which grew by 6% during the first three quarters, has more than offset a decline in low-end products.

NVIDIA has a roughly 70% share of the overall PC gaming market, with a better-than-80% share in countries like China, Korea, and Russia, where PC gaming is booming. Competitor AMD launched new GPUs late last year, along with announcing a new graphics API called Mantle, forcing NVIDIA to lower prices on some of its GPUs. The high-end AMD cards were reportedly selling out after launch, although at least some of the demand was from miners of cryptocurrencies, not gamers. This means that AMD's gain may not have necessarily been NVIDIA's loss, and one thing to watch for in NVIDIA's earnings report is how the GeForce business held up during the quarter.

The enterprise market
NVIDIA has been pushing into the enterprise market with its Tesla line of GPUs, a business which grew by 43% through the first three quarters of last year. Tesla is an add-on card that can accelerate various high-performance computing applications, from scientific simulations to business analytics, and NVIDIA now has an 85% market share in the high-performance computing accelerator market. NVIDIA signed a deal with IBM during the fourth quarter to put Tesla GPUs inside IBM's servers, using the hardware to accelerate IBM's enterprise software. This deal opens up a new market for NVIDIA's Tesla, and the company estimates that the annual opportunity is as much as $3 billion. That's about as big as NVIDIA's PC GPU and workstation GPU businesses combined.

Another big opportunity for NVIDIA, estimated at about $5 billion per year, is enterprise virtualization. NVIDIA's GRID is a technology that allows graphics hardware to be virtualized, meaning that many users can share a single GPU. GRID supports all of the major virtualization solutions, and the number of enterprise customers evaluating the system has grown from just five in October of 2012 to more than 200 in October of 2013.

Amazon is one major company to support GRID, allowing customers of its web services to launch instances powered by NVIDIA's GRID GPUs. This allows graphics-intensive applications to be run in the cloud, eliminating the need for expensive hardware on the client side.

NVIDIA's enterprise business should continue to show strong growth in the fourth quarter, and although it represents a small part of the total business, the growth opportunities are immense.

The bottom line
While NVIDIA's mobile business will continue to drag down profits, the rest of the company should post solid results. Gaming GPUs might be pressured a bit by AMD's new products, but NVIDIA's next GPU architecture is set to launch soon based on the company's roadmap.

This should provide a performance boost to NVIDIA's next generation of GPUs, eliminating any advantage that AMD may currently have. On the enterprise side, Tesla and GRID are showing a lot of promise, and I expect the rapid growth to continue. While earnings will decline, NVIDIA is positioning itself for future growth.