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Strong Demand for NVIDIA's Graphics Chips Makes It a Solid Investment

July 14, 2014 | About:

Santa Clara-based GPU manufacturer NVIDIA (NASDAQ:NVDA) released impressive first-quarter results. As the PC gaming segment is seeing strong growth, chipmakers like NVIDIA have great opportunities. However, as the PC gaming segment is now shifting to a new platform, NVIDIA is gearing up to align itself with this change.

Solid results

Looking at the financials, NVIDIA posted a solid 16% increase in revenue as compared to last year's first quarter. However, revenue was down 4% from the fourth quarter of 2013. This decline is attributed to the transition in the market from PC gaming to smartphones. Despite impressive results, the chipmaker failed to impress investors, and as a result, the stock fell 2.4%. However, analysts are expecting a solid performance going forward.

Statistics reveal that notebook and PC gaming segments are flourishing. NVIDIA, with its robust moves, has succeeded in capturing the market with its Tesla, Quadro GRID, and Tegra graphics products. Further, the chip maker is seeing its graphics business growing at a smooth pace, as it is expected to attract more gamers that will increase the demand for NVIDIA’s high-end GPUs to play the latest PC games.

NVIDIA also excels in notebook GPU manufacturing. In the past, the chipmaker has introduced exciting new notebook gaming GPUs. The company is expecting a lot from its Maxwell architecture introduction, which provides enhanced performance, battery life, and form factor of the notebooks. As a result, NVIDIA is already seeing strong demand. It is expecting this momentum to continue in the second quarter.

Product innovation

Moving on, NVIDIA is counting on the GTX 750, which is seeing strong demand. As a result, the company is planning to boost its production in response to increased shipment demand. The chip maker is also making moves to promote its GPU business. It is undertaking aggressive marketing initiatives such as the GPU Technology Conference. The chip maker is counting on this conference, as it saw a 25% increase in the number of guests as compared to last year. This is good sign for NVIDIA, indicating that the GTX 750 is doing well in the market.

Further, NVIDIA is preparing to launch GeForce GTX TITAN Z graphics card in the second quarter. This card is expected to satisfy both gamers and developers, as it provides high performance graphics. This is sure to attract most gamers who like to play high-end games on their PCs, notebooks, smartphones, and tablets. Moreover, besides these, seeing the fast moving mobile segment, the chip maker is making moves to penetrate it with a wide range of applications, including cars and data centers.

NVIDIA enjoys a strategic relationship with giants such as HP, Dell, IBM, and Cisco. The launch of some of the most awaited products, such as HP’s DL380p, Dell 720, and IBM x3650, which are integrated with NVIDIA Enterprise GPU, will power its performance in the future. Further, IBM recently announced that it will use NVIDIA’s NVLink interconnect technology in its future POWER8 CPUs, which will probably convert Power CPUs to the mainstream through the openPOWER foundation. Such news represents a bright future for NVIDIA.

NVIDIA has also stretched its wings in the automotive and mobile segment. With these segments seeing good growth all around the globe, the company is seeing solid growth opportunities. For example, Audi launched its Tegra-powered A3 in the U.S. that is integrated with NVIDIA’s Tegra. Further, the company is engaged in bringing in many new innovative graphics with Jetson TK1, which is a development platform targeted at automotive.


NVIDIA's penetration in mobile segment is expected to benefit it in the future. It is also tapping other applications that can improve its performance. So, investors should continue counting on NVIDIA for the long run.

Rating: 4.5/5 (2 votes)



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