Nvidia (NVDA) recently provided investors with a very rosy outlook for its future. The company's president and CEO, Jen-Hsun Huang, stated he now expects revenue for fiscal 2013 (ends January 2013) to be in the range of $4.7 to $5 billion.
This is well ahead of the $4.45 billion consensus from the 33 covering analysts that was current ahead of the announcement.
This more than supports the forecast I offered in our August 8 earnings preview that NVDA should be able to grow earnings in fiscal 2013 by 20% to 30%.
Last November when NVDA was trading in the $12s I wrote that we would likely see a "fireworks rally" connected with the January Consumer Electronics Show.
Following that, on January 24 when NVDA was trading for just under $25, I wrote it was time to exit the stock. My thinking then was there was too much excitement behind the sharp upward spike.
When we published our August 8 earnings preview NVDA was trading at only $11.93, a decline of over 50% from the January call to sell.
In that preview I wrote that with a balance sheet worth over $3, NVDA was trading at less than 10 times the fiscal 2012 earnings consensus and as such, was oversold.
My thinking then, which remains the same today, is NVDA would continue to build its design base and we would, again, see an impressive rollout of NVDA powered mobile devices (tablets and smartphones).
NVDA is the first company to roll out quad-core ARM Holdings-based processors for tablets and smartphones.
Looking further down the road, NVDA predicts it will be able to grow its mobile business, which currently includes about $1B in Tegra mobile processors, and a roughly equal amount of mobile GPU (Graphics Processing Unit) business, to about $20B by 2015.
T o fuel this growth NVDA will need to execute on its stated goal to integrate the baseband processor technology it got from the Icera acquisition by mid-2012.
One of the more interesting events I see unfolding in the near future for NVDA is Windows 8, which according to Microsoft will support ARMH core processor solutions as well as the traditional x86 offerings from Advanced Micro Devices and INTC.
NVDA has long claimed that a PC with a good graphics processor like those NVDA is known for, and a lower end general purpose processor, can outperform the more traditional designs that depend on higher performance general purpose processors (at the time x86 processors).
To this end, NVDA stated we'll see new Windows 8 PCs sporting NVDA processors and graphics at a price of around $200 that provides performance similar to a current MacBook Air.
Bottom Line for NVDA:?? ?While the price of NVDA is up roughly 20% from the August 8 entry price I previously suggested, I think there is still nice upside in the neighborhood of 50% from the current price of $14.38.
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