With innovation comes a new opportunity and the same has been
witnessed in the case of
). Recently, NVDIA has been selected by the "Indian Space Research
Organization" (ISRO). SAGA system, India's most powerful
supercomputer, which holds the 86th position on the Top 500 list,
will be supported by the NVIDIA GPU to enhance the capabilities of
satellite launch vehicles.
This supercomputer leverages the power of 640 NVIDIA Tesla GPUs,
which provides up to 394 teraflops of peak performance. Moreover,
this newly developed supercomputer enables ISRO to accelerate and
improve the design and analysis of new and existing satellite
launch vehicles, which enable more complex and accurate design
We believe that this may open up new possibilities for NVIDIA
across the globe. This new technology deployed by ISRO helps reduce
the time to create, simulate and verify a new launch vehicle, which
is now restricted to days compared to weeks earlier. Moreover, this
has resulted in an improvement in the overall quality while
enhancing the durability at the same time.
Although the company's entry into space research is a prudent
move, almost 80% of its revenue is derived from the PC market. From
that, almost 50% of the revenue comes from the high-end PC and
gaming segments. This is an area where the company's business is
dependent on consumer spending and economic growth. Although space
research diversifies the company's core business considerably, we
believe that this does not cover up for the macroeconomic risks
associated with its core business.
The competition faced by the company has increased
substantially, as NVIDIA competes againstsome well known
semiconductor companies like
Advanced Micro Devices
). More aggressive and price sensitive moves by these companies may
result in price wars and shifts in customer loyalty. Moreover, the
company faces new competition as it enters new businesses.
As expected, NVIDIA delivered mixed first quarter results with
EPS surpassing our expectations, but revenue declining both
sequentially and year over year. The company refreshed its notebook
GPUs with the launch of the GeForce 600M series. NVIDIA expects to
benefit from the integration of the new Tegra 3, and a strong
growth in the notebook segment.
Moreover, NVIDIA's performance may be tempered slightly by the
economic slowdown in Europe. Again, advanced chips developed by
Advanced Micro Devices Inc.
) may bring on more competition for the company.
Currently, NVIDIA holds a Zacks #3 Rank, implying a short-term
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